U.S. large-caps have been a favorite asset class in 2012 with investors preferring bigger, more-established companies.
S&P Capital recommends the iShares S&P 100 Index Fund (NYSEArca:OEF) which has an expense ratio of 0.2% and focuses on the market’s largest stocks.
“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. [Why the Stock ETF Rally May Have Legs]
OEF touts $4.9 billion in assets under management and has proven to be an affordable way to buy the S&P 100 index. The ETF holds top-quality stocks such as Apple (NasdaqGS: AAPL) and Exxon Mobile (NYSE: XOM). Furthermore, 8 of the top 10 holdings in OEF are also members of the Dow Jones Industrial Average. [ETF Chart of the Day: Mega Caps]
“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,” Todd Rosenbluth of S&P Capital wrote.