by Jenny Ruth
Betashares executive director Hugh Stevens says his company’s S&P 500 Index Equal Weight Exchange-Traded Fund (ETF) is one way a retail investor seeking exposure to US stocks can solve the increasing concentration of the market-weighted benchmark S&P 500.
The equal weight index that the ETF tracks has a history dating back to 1970, although the Betashares ETF was only launched in December 2020, and Stevens says the equal weight index has consistently outperformed the benchmark.
“It gives you diversification. Fundamentally, the rationale is that if you feel that the capital expenditure going into AI particularly, and into other technology from the “magnificent seven” is over-extended, and you think the benefits from fiscal stimulus and any growth in the US economy is going to be more broadly based, this is a fund that gives you exposure to the rest of the US economy,” Stevens says.
The ETF has reached nearly A$1 billion in funds under management (FUM) with inflows of about A$190 million during 2025.
It has delivered total returns in Australian dollar terms since inception after management fees of 12.89% a year – the fee is 0.29%. That compares with the 0.34% fee charged by NZX’s Smart US 500 ETF.
Concerns about the increasing concentration within the US benchmark have been fuelled by the fact that the top 10 stocks within it now account for roughly 40% of the index’s total market capitalisation compared with about 24% between 1880 and 2010, according to Ed D’Agostino, publisher and chief operating officer at Mauldin Economics.
“The situation is even more concentrated than it appears. State Street found that only 44 stocks are driving the index’s returns, the lowest number in about 35 years,” D’Agostino says.
“You think you’re buying 500 companies with a goal of diversification, but you’re really buying 44 with a heavy tilt toward a handful of mega-cap tech names.”
Those tech names are mostly household names in New Zealand: Apple, Microsoft, Amazon, Alphabet (which owns Google, YouTube and Waymo), Meta (which owns Facebook and Instagram), Tesla and Nvidia, which makes the smart chips that power AI.
According to Liz Ann Sonders, chief investment strategist at Charles Schwab, there were 74 stocks within the benchmark index that, strictly on price, outperformed Nvidia in 2025.
Stevens says while most of Betashares ETFs are essentially passive funds which track both established indices and others that Betashares has constructed, it also offers a few that are actively managed.
That includes, for example, its S&P 500 Yield Maximiser Complex ETF which aims to maximise quarterly income and doesn’t track the benchmark index – it has achieved 14.45% annual returns over the five years ended December and charges a 0.79% annual management fee.
“Depending on your investment horizon, the thing that’s new now is that there are options, cost-effective and easily accessible options” for getting exposure to US shares and achieving diversification.
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