Investors are calling for ETFs which “explicitly” capture or side-step US mega cap allocations including the ‘magnificent seven’, according to Amundi global ETF head Benoit Sorel.
Days after the launch of the Amundi MSCI USA Mega Cap UCITS ETF (MEGA) and Amundi MSCI USA Ex Mega Cap UCITS ETF (XMGA), Sorel (pictured) told ETF Stream he is “not surprised” to see an expansion of issuers’ ETF toolkits in a year where US equities have dominated client conversations.
He said many active portfolio managers have to-date chosen to be at most neutral in their US mega cap allocations, relying on instruments providing broad market exposure.
“The opposing story for those wanting US exposure without emphasising those names has been S&P 500 equal weight,” Sorel said.
“It has been historically the best year ever for equal weight ETF flows in Europe, but it is not an explicit choice on whether to go long mega cap or not and that is why there is a need in the market to explicitly get or avoid this exposure.
“What clients have been asking for is a tool to pilot their allocation and overweight and underweight mega cap exposure in an efficient and explicit manner.”
MEGA tracks the MSCI USA Mega Cap Select index to provide cap-weighted exposure to 37 companies with market capitalisations exceeding $200bn. XMGA, meanwhile, provides exposure to the MSCI USA index and excludes any stocks which feature in the MSCI USA Mega Cap Select index.
The launches come hot on the heels of the recent launch of BlackRock’s S&P 500 top 20 ETF, with fund selectors divided on the merits of mega cap ETFs.
