Ken Griffin is a highly skilled investor known for his exceptional stock-picking abilities. With a net worth of almost $38 billion, he established Citadel in 1990, which has grown to become one of the most prosperous investment firms. hedge fund of all time.
Nevertheless, Griffin’s most significant acquisitions during the second quarter of 2024 were not single stocks. Instead, the wealthy investor acquired a large number of shares in two exchange-traded funds (ETFs) rapidly in Q2.
Griffin’s large purchases of exchange-traded funds
The biggest investment that Citadel owns by a significant margin is Trust of the SPDR S&P 500 ETF ( SPY 0.22% ) Griffin purchased over 2 million extra shares of this ETF in the second quarter, raising his hedge fund’s ownership by around 56.7%.
This ETF seeks to replicate the performance of the underlying index, as suggested by its name. S&P 500 The SPDR S&P 500 ETF Trust was the initial ETF to be listed in the United States and is currently considered the largest ETF in terms of market size. funds managed It is among the ETFs that are traded most frequently worldwide.
A different ETF has now become the second-biggest position in Citadel’s portfolio. The Invesco QQQ ETF. ( QQQ 0.13% ) In the second quarter, Citadel purchased 2.82 million shares of the ETF, significantly increasing its stake in the Invesco QQQ ETF by almost 585%.
The Invesco QQQ ETF follows the performance of… Nasdaq-100 The index consists of the top 100 non-financial companies that are listed on the Nasdaq stock exchange. Introduced in 1999, this ETF holds the fifth position in terms of assets under management (AUM) and is one of the ten most actively traded ETFs.
What was the reason behind Griffin’s decision to invest in these two ETFs?
Griffin typically refrains from publicly discussing his investment activities on a quarterly basis, hence his silence on the recent transactions is expected. Despite this, we can speculate based on analysis as to why he heavily invested in these particular two ETFs.
Griffin’s aggressive purchasing of these funds could be driven by his positive outlook on the U.S. economy. stocks with a large market capitalization Specifically, the SPDR S&P 500 ETF Trust offers a simple method to invest in the top 500 companies in the United States. On the other hand, the Invesco QQQ ETF focuses on holding the largest stocks traded on the Nasdaq, some of which are also part of the S&P 500.
Griffin could also maintain a positive outlook on the future of businesses that specialize in machine intelligence AI stocks make up nine out of the top 10 holdings in the Invesco QQQ ETF and eight out of the top 10 holdings in the SPDR S&P 500 ETF Trust.
The hedge fund manager probably values the diversification provided by both ETFs. He was able to invest in 503 different stocks through the SPDR fund and 101 stocks through the Invesco fund.
Do you also want to purchase these ETFs?
Relying solely on the investment decisions of a well-known and affluent investor is not advisable. Nevertheless, understanding the possible motivations behind someone like Griffin purchasing shares of the SPDR S&P 500 ETF Trust and the Invesco QQQ ETF could be interesting to you.
Suppose Griffin did purchase these two ETFs due to his optimism about the economy and AI stocks, and his desire to diversify. Would it be advisable for you to invest in them for the same reasons? While I consider them to be solid choices, I am of the opinion that there are alternative ETFs available with more attractive cost structures.
Instead of opting for the SPDR S&P 500 ETF Trust, you may want to consider the… S&P 500 ETF by Vanguard Both exchange-traded funds mirror the performance of the S&P 500 index. Nevertheless, the Vanguard fund’s characteristics differ. yearly cost ratio The percentage is only 0.03% compared to 0.0945% for the SPDR ETF.
Likewise, the Vanguard Mega Cap Growth ETF can be referred to as a large-cap growth exchange-traded fund offered by Vanguard. Has a significant number of identical stocks in both the Invesco QQQ ETF and the Vanguard ETF. However, the expense ratio of the Vanguard ETF at 0.07% is considerably lower compared to the Invesco ETF’s ratio of 0.2%. In addition, it has shown better performance than the Vanguard fund in the past year.
