S&P Rates Mega-Cap ETF Overweight

Loading...
Loading...
In a year in which Apple
AAPL
has soared to astronomical heights and U.S. large-caps have proven to be safer bets than foreign equivalents, it is not surprising that some investors are showing a preference for mega-cap stocks. Investors looking to access the largest of the U.S. large-caps have choices when it comes to ETFs, but S&P Capital IQ prefers one fund: The iShares S&P 100 Index Fund
OEF
. With an expense ratio of 0.2 percent and almost $4.9 billion in assets under management, OEF tracks the S&P 100 Index. "S&P Capital IQ Equity Strategy Group favors relatively high exposure to the Consumer Staples, Energy and Information Technology sectors. As of June 2012, OEF had 50% of its assets in these sectors, compared to 42% for IVV. In contrast, OEF had less exposure to the Materials and Utilities sectors (3% vs. 7%), two sectors that S&P Capital IQ views less favorably from a top-down perspective," the research firm said in a note. OEF's top-10 holdings account for 32.3 percent of the fund's weight. Apple receives the largest allocation at almost 7.3 percent. Other top-10 holdings include Exxon Mobil
XOM
, International Business Machines
IBM
and Wells Fargo
WFC
. Eight of OEF's top-10 holdings are members of the Dow Jones Industrial Average. "Taking a bottom-up look at OEF's holdings, across various sectors, we see many stocks that S&P Capital IQ finds favorable from a valuation and risk perspective. Indeed, eight of the 10 largest holdings that collectively comprise 32% of the portfolio are ranked as Strong Buy or Buy by the S&P Capital IQ equity analytical team," S&P said in the note. Meanwhile, eight of the top-10 holdings earn an above-average S&P Quality Ranking of A- or higher due to their consistently strong earnings and dividend track record." Helped Apple's ascent, OEF has outperformed the iShares S&P 500 Index Fund
IVV
over the past month, the pat three months and year-to-date. With its recent surge, Apple now has a market cap of almost $624 billion, the highest of all-time. In addition to Apple and IBM, OEF's other tech holdings include Microsoft
MSFT
Loading...
Loading...
, Intel
INTC
and Oracle
ORCL
. "Overall, OEF receives an Overweight ranking from S&P Capital IQ. We think this diversified offering provides investors exposure to a number of stocks that are viewed favorably from a valuation and risk perspective at a low cost," S&P said. For more on ETFs, click
here
.
Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorLong IdeasNewsBroad U.S. Equity ETFsShort IdeasPre-Market OutlookMarketsAnalyst RatingsTrading IdeasETFs
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...