XLG - XLG: Why 50 Stocks Is Too Few

Summary

• XLG is a simplified version of an S&P 500 ETF, selecting only the top 50 companies and reconstituting each June. XLG's fees are 0.20%, with $1.81 billion in assets under management.
• XLG has historically underperformed SPY and other mega-cap ETFs like OEF and MGC. The strategy hasn't worked, and one key reason is because 50 stocks is too few.
• Besides, OEF and MGC are two other mega-cap ETFs with better fundamentals and earnings momentum. This article compares volatility, valuation, growth, and profitability for all three.
• Focused ETFs solve the problem of over-diversification, but XLG goes too far. I don't recommend investors take a position.

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