US equity ETFs: Build a portfolio that could work for you
Marketing Communication
From some of the world’s biggest listed companies to penny stocks and everything in between, the US stock market offers a wide range of potential opportunities for investors.
The US market has, over time, benefitted from a diverse mix of stocks and a robust history of growth1. This is the world’s largest market by market capitalisation2. The sheer scale of the US market cannot be underestimated: the two biggest American companies have a combined market cap of almost $7 trillion, exceeding that of the entire London Stock Exchange3. And the US dwarfs other countries in the MSCI World Index, accounting for almost three-quarters of the total weighting of the index.
But there is much more to the US equity market than trillion dollar companies. It is also home to hundreds of small- and mid-sized firms across many sectors. The US stock market thus offers a number of characteristics that may be considered appealing to investors such as scale, innovation and diversity4. Together, these combine to make US equities a staple in many investment portfolios.
And investing in US equity exchange-traded funds (ETFs) could offer a convenient way for investors to access this dynamic market.
Source: MSCI, data as at 31 October 2024
The rise of the US tech giants has been transformative for global markets. These innovators have reshaped the way we communicate (both via smartphones and social media), what we use to access knowledge (artificial intelligence and search engines), how we buy consumer goods (online shopping platforms), and the way we travel (electric vehicles).
Humans’ fascination with technological advancement creates a strong demand for these companies’ products, which could offer investors growth opportunities. That said, the tech sector’s recent success5 does bring with it potential pitfalls. As this sector has propelled the performance of US equities in recent months, there is a risk that this growth stalls, thus affecting the broader market.
To be classified as a mega cap, a company must have a market cap exceeding $180 billion to $200 billion, depending on certain conditions6. Mega caps might be considered attractive for a number of reasons. For one, they could present investors with a means to tilt their portfolio towards the technology sector.
The MSCI US Mega Cap Select Index has a heavy tilt towards US tech, with the sector weights for information technology and communication services (both technology-related sectors) accounting for around 60% of the total index versus 40% for the MSCI US Index7. Another potential advantage of mega caps is their ability to generate revenues from international markets8.
In addition to the tech titans, the US has many large-cap companies that are global leaders in other sectors. The MSCI US Mega Cap Select Index includes some of the biggest banks in the world, vast energy companies, influential pharmaceutical producers, and large consumer goods suppliers and distributers9.
You may also want exposure to companies that aren’t mega caps. This might be because you want to enhance your portfolio’s diversification10 by including a mix of company sizes, as small and mid-cap companies react differently to market conditions than large caps.
Smaller-cap stocks may also be undervalued compared with their larger counterparts, creating potential opportunities for higher returns.
There is much more to the US equity market than trillion-dollar companies. It is also home to hundreds of small- and mid-sized firms across many sectors.
Amundi ETF offers a selection of US products, which could help you tailor your portfolio to your investment objectives. You might choose to invest in multiple US ETFs that target different elements of the market. For instance, you could select an ETF that focuses on mega caps – or excludes them - while pairing that with one that emphasises a sustainable approach. Treating ETFs like your strategic investment toolkit could help you calibrate a portfolio and align it with your risk tolerance, goals and values.
Amundi MSCI USA UCITS ETF Acc
For investors looking for comprehensive exposure to the US market. This ETF tracks the MSCI USA Index and gives investors exposure to over 600 stocks.
Amundi MSCI USA Mega Cap UCITS ETF Acc
This ETF is for investors who are optimistic about mega caps. It consists of 37 of the US’s biggest companies and tracks a tech-heavy index, with technology companies accounting for around 45% of its total holdings.
Amundi MSCI USA Ex Mega Cap UCITS ETF Acc
For investors who are more cautious about the mega caps sector. This ETF removes the 37 largest companies, which reduces concentration risk.11
Amundi S&P 500 Equal Weight ESG Leaders UCITS ETF DR – USD (A)
For investors who are looking to dilute their exposure to tech companies while increasing investments in those leading the ESG transition.
1 Source: Bloomberg, MSCI, Amundi. Data as at 30/08/2024. Past performance is not a reliable indicator of future performance.2 Source: World Federation of Exchanges. The New York Stock Exchange and NASDAQ are the world’s largest exchanges by market capitalisation. Data as at 30/8/2024. Broadly speaking, market capitalisation refers to the overall value of company shares listed an exchange.3 Source: Bloomberg, as at end June 2024; and LSEG data as at 26 June 2024. 4 Diversification does not guarantee a profit or protect against a loss. Diversification does not guarantee a profit or protect against a loss.5 Past performance is not a reliable indicator of future performance.6 As of July 2024, MSCI considers a company to be mega cap if its market cap exceeds $180 billion or $200 billion, depending on whether it is an existing index constituent or a new one, respectively. 7 Source: MSCI, as at 31 October 2024.8 Source: MSCI, as at 30 September 2024.9 Source: MSCI, as at 31 October 2024.10 Diversification does not guarantee a profit or protect against a loss.
11 This is the risk of potential losses on a single large investment in a particular market or sector.
