Investors have once again poured millions of dollars into large-cap stocks.
According to the Zhong Tong Finance mobile app, as US tech stocks rebounded from last week's market crash, investors have once again poured millions of dollars into large-cap stocks. Bloomberg's data shows that on Monday traders poured a net $0.21 billion into the Invesco S&P 500 Top 50 ETF (XLG), the largest single-day capital inflow in the fund's nearly 20-year history. The record-breaking inflow pushed the ETF's assets up 4% to $5.3 billion, almost half of which was attracted over the past year.
XLG tracks the 50 largest companies in the S&P 500 index. Investors' enthusiasm for XLG highlights their confidence in large, growth-oriented stocks, primarily in the technology sector. Earlier this year, tech stocks drove the stock market to new highs.
The fund holds large-cap stocks including Apple (AAPL.US), Meta (META.US), Nvidia (NVDA.US), Google (GOOG.US), Microsoft (MSFT.US), and Amazon (AMZN.US), all of which have been major contributors to the stock market rally this year and are among the so-called "big seven." Indexes tracking the performance of these stocks have risen more than 30% this year.
"XLG is a popular investment tool that provides investors exposure to mega-cap stocks while offering liquidity and ease of trading," said Nick Kalivas, head of factor and core equity product strategy at Invesco. "There has been increased interest in using it as a mega-cap allocation tool, and we're not surprised."
XLG attracts record-breaking funds.
For most of this year, tech stocks have led the stock market bull run, fueled by enthusiasm around artificial intelligence (AI). Concerns about overvaluation and when investments in AI will ultimately pay off, combined with worries about the Fed waiting too long to cut benchmark interest rates, have caused some of these stocks to fall in recent days, despite the Nasdaq 100 index rising again this week.
"Tech stocks still have a lot of advantages, especially in terms of quality. From the perspective of profit margins, cash flow or ROE, tech stocks are one of the best performing sectors." said Cayla Seder, a macro strategist at Deutsche Bank. "Therefore, buying high-quality stocks on dips is very wise as we enter a period of economic uncertainty."