Whenever you think of Jeff Bezos, Amazon (Nasdaq: AMZN | AMZN Price Prediction) is the first thing that comes to mind. This is because it is one of his most successful ventures, but Bezos does not limit himself to it. He has built a heavily diversified portfolio of companies that continue to generate impressive returns for him. He chooses to invest in cutting-edge companies and has positions in dozens of them.
One of his favourite sectors is technology, and he holds many tech stocks belonging to different niches. While it may not be possible for an investor like you and me to build a portfolio like his, it is possible to invest in a basket of stocks that replicate the performance of his portfolio. Exchange-traded funds (ETFs) are an ideal choice for retail investors looking to own elite names at low cost. Since Jeff Bezos prioritises the technology sector, here are 4 ETFs he’d recommend for everyday investors.
SPDR S&P 500 ETF Trust
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) gives exposure to the S&P 500 and invests in 500 companies. It invests in some of the largest companies in the country and gives an opportunity to grow your money as the market improves. The S&P 500 has experienced numerous ups and downs this year, but it is up 6.3% year-to-date. This ETF is the best way to own the top tech companies at minimal cost.
The ETF has generated returns of 15.05% in 1 year, 19.56% in 3 years, and 16.50% in 5 years. Its holdings include:
- Information technology: 34.03%
- Financials: 13.77%
- Consumer Discretionary: 10.40%
- Healthcare: 8.79%
It is top-heavy with the Magnificent Seven and holds 503 stocks. Its top 10 holdings include Nvidia (NASDAQ:NVDA), Microsoft (Nasdaq: MSFT), Apple (Nasdaq: AAPL), Tesla (Nasdaq: TSLA), Alphabet Inc. (NASDAQ: GOOGL), and Meta Platforms (NASDAQ:META). The top 10 stocks constitute 37% of the fund. Bezos is all about technology, and this ETF meets his criteria. It has a yield of 1.11% and an expense ratio of 0.09%.
Invesco QQQ Trust Series I
The Invesco QQQ Trust (NASDAQ:QQQ) is based on the Nasdaq 100 index and invests in the top 101 companies listed on Nasdaq. It has a yield of 0.50% and an expense ratio of 0.20%. The fund has generated 15.82% returns in 1 year and 26.17% in 3 years. This is another tech-heavy fund, but it invests across different countries, offering ultimate diversification.
While its highest allocation is in the United States (96.77%), this is followed by Canada (0.82%), Brazil (0.78%), and the Netherlands (0.73%). Its sector allocation is as follows:
- Information technology: 60.84%
- Consumer Discretionary: 19.44%
- Healthcare: 4.82%
- Industrials: 4.35%
QQQ also owns the Magnificent Seven in the top 10, which constitute 50% of the portfolio. Its highest investment is in Nvidia at 9.17%. The fund is set to benefit from the growing adoption of artificial intelligence, and several hedge funds are increasing their position in it. QQQ has generated a return of over 400% over the past decade. While it can be volatile due to the heavy concentration on the tech sector, QQQ’s historical performance is impressive. It has shown volatility but has bounced back from the lows.
Schwab U.S. Large-Cap ETF
The Schwab US Large-Cap ETF (NYSE: SCHX) tracks the total return of the Dow Jones U.S. Large-Cap Total Stock Market Index. It holds 751 stocks and has an expense ratio of 0.030%.
The fund has generated a 1-year annualized return of 15.64%, a 3-year annualized return of 19.75% and a 5-year annualized return of 16.34%. SCHX is another tech-heavy fund with the highest allocation in the sector. The allocation is as follows:
- Information technology: 32.55%
- Financials: 14.20%
- Consumer Discretionary: 10.33%
- Communication services: 9.51%
Another reason for Jeff Bezos to pick this ETF is the high allocation to the tech companies, including the Magnificent Seven. SCHX focuses on the large-cap companies that are the biggest market movers. Its top 10 holdings make up one-third of the total fund. Its annualized returns look promising and could continue. SCHX has demonstrated solid performance in recent years, and an investment of $10,000 in 2015 would be worth $36,846 today.
Vanguard Growth ETF
The Vanguard Growth ETF (NYSE: VUG) tracks the performance of the CRSP US Large Cap Growth Index, which tracks companies with high growth potential. It has a yield of 0.43% and holds 165 stocks. Out of the four ETFs, VUG has the highest concentration on the technology sector with 60% of the total allocation.
It also owns the Magnificent Seven, and the top 10 constitute about 60% of the portfolio. The fund has an expense ratio of 0.05%. The sector allocation is as follows:
- Information technology: 60.40%
- Consumer discretionary: 18.90%
- Industrials: 8.90%
- Healthcare: 5.40%
Its 1-year annualized return is 24.50%, 3-year return is 83.84% and 5-year return is 115.5%. Driven by large cap, growth companies, VUG has generated impressive returns for investors, and I believe it will continue doing so.
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