Fund launches can often act as a form of rearview mirror, showing us the big market trends that have already taken hold. An important question is whether such trends can continue, and how big a call it is to bet on them.
This brings me to a recently launched exchange-traded fund. The iShares S&P 500 Top 20 ETF (SP20) focuses, as the name suggests, on the biggest 20 companies in the US market and should serve investors who expect the biggest constituents to maintain their dominance.
There is certainly some rationale for this. We're all familiar with the stunning returns of the Magnificent Seven, and even broadening this out to the 20 largest businesses leaves us with an impressive cohort. IShares notes that the top 20 contributed more than two thirds of the S&P 500's return over the past three years.