Q: Any opinion on I Shares XUSC (3% weighted) as a hedge against XSP where there is a major portion allotted to large companies?
I believe this is a new ETF and might, in my opinion, cause one to wait awhile however considering the issuer is there any point in holding off an attempt to partially offset XSP?
Any better ideas would be great.
Thanks
I believe this is a new ETF and might, in my opinion, cause one to wait awhile however considering the issuer is there any point in holding off an attempt to partially offset XSP?
Any better ideas would be great.
Thanks
5i Research Answer:
XUSC is a new ETF, and as a result, its AUM is fairly small ($26M), but its MER is decent at 0.12%. The fund aims to replicate all of the same companies within the S&P 500, but caps each weighting at a maximum 3%. By doing so, an investor is still gaining a higher exposure to the Magnificent 7 stocks, but at a much smaller magnitude than the market-cap weighted S&P 500.
This idea slightly differs from an equal-weighted S&P 500 ETF, since it still weights more heavily towards the larger names, but at a different scale than the S&P 500. Due to its newness, we would prefer the RSP equal-weight S&P 500 ETF if one is looking to hedge against the mega-cap names, but as this ETF grows it may become more interesting to look at.