πππA hot inflation print in today's Consumer Price Index cause the US markets to drop. Analysts say that a data dependent Feds may likely push back the timing of its first interest rate cut after CPI revealed that inflation rose sharply in March. Some analysts even believe that 3 rate cuts are off the table for 2024.
In the midst of this market volatility, $SPDR Portfolio S&P 1500 Composite Stock Market ETF(SPTM)$ provides a low cost, great diversified way to ride the volatility ahead.
SPTM tracks a market cap weighted index that covers the entire US market cap spectrum from small cap, mid cap to large cap stocks. The S&P Composite 1500 Index consists of stocks included in the S&P500 Index, the S&P Midcap 400 Index and the S&P SmallCap 600 Index. The Index represents about 90% of the investable US equity market.
An important criteria to be included in the S&P 1500 Index is that a company should have positive earnings over the 4 most recent quarters and for the most recent quarter.
The Top 10 holdings include 6 of the Magnificent 7 companies with the exception of Tesla. They are $Microsoft(MSFT)$
Microsoft has overtaken Apple to be the market leader this year due to its strong positioning in AI. Microsoft has invested USD 13 billion into OpenAI which owns ChatGPT.
Nvidia is the Star Performer this year due to its specialised AI chips which are in hot demand. Nvidia has recently released the next generation AI Superchip called GB200 Grace Blackwell Superchip which is Nvidia's most powerful chip ever made.
Apple is a late starter in AI but has since joined the race as it is increasing its resources to include A18 and M4 chips. Apple iPhone 16 release will be part of Apple 's AI push.
Amazon has invested USD 4 billion in Anthropic to deepen its commitment to advancing Generative AI. Amazon is the dominant market leader globally not only in ECommerce but in Cloud Computing as well.
Meta Platforms is the world' s largest social media platform. It is also pushing into AI and is building a new platform to allow its users to create their own AI characters and distribute them across Meta's social apps.
The Top 10 holdings weightage is 29%. Total number of holdings is 1506. The expense ratio is a low 0.03%. Distributions are paid every 3 months. The current distribution yield is 1.35%.
Performance wise SPTM is down 1% today and in the past 5 days SPTM has dropped 1.7%. However SPTM is up 8.3% year todate. In 2023, SPTM has risen by 24.9%.
Wall Street Analysts are bullish on SPTM with Buy rating, an average target price of USD 69.55, an upside potential of 10%. This is according To Tipranks having surveyed 1,511 Wall Street Analysts.
What I like about SPTM is the comprehensive coverage it has on 90% of the US stock markets. These represent all the profitable companies with at least 4 consecutive quarters of profitability. SPTM does the heavy lifting for me as it removes unprofitable stocks, add profitable ones and rebalances on a quarterly basis.
While the Megacap companies power their way, SPTM also includes the mid cap and small caps stocks that are more agile and have more exponential growth ahead.
I am happy with the performance of SPTM as I am currently up 20%. This ETF forms part of my core portfolio and provides me with a great source of passive income while waiting for capital growth. That's a Win Win situation for me.
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