Mega Cap ETFs Can Be Used To Hedge Small Cap Exposure

Mega Cap ETFs have several uses. They act as complements to the holdings in small cap and help form a “barbell” approach and offer equity exposures that avoid the risky companies altogether. Some of the mega cap ETFs are SPDR S&P 500 (ETF) (NYSE: SPY), Vanguard Mega Cap 300 Index (ETF) (NYSE: MGC), iShares S&P 100 Index (ETF) (NYSE: OEF) and Rydex Russell Top 50 (ETF) (NYSE: XLG). The Year-to-date gains of these funds are SPY (23.8%), MGC (22.8%), OEF (19.8%) and XLG (17.6%). Although the mega cap funds have delivered solid gains, they lagged behind the funds linked to S&P 500. The returns also indicate that the smaller companies in the S&P 500 have outgained mega caps so far this year.