Principal Exchange-Traded Funds Principal US Mega-Cap ETF

USMC

Market cap $3.3B

The firm initiated a new position with 128,122 shares acquired. The fund's transaction represents 3.5% of reported 13F assets under management.

The Principal U.S. Mega-Cap ETF has outperformed the S&P 500 and peers, benefiting from a strong mega-cap focus and lower volatility. USMC's portfolio is concentrated in 25 holdings, heavily weighted towards technology, financial services, and communication services, with a higher valuation than the S&P 500. Despite high interest rates and trade uncertainties, USMC's quality profile makes it a solid choice for exposure to mega-cap stocks.

Principal U.S. Mega-Cap ETF provides concentrated, actively managed exposure to a select number of U.S. mega-caps. Fees are low at 0.12%, and the ETF has $2.35 billion in assets under management. Unlike market-cap-weighted alternatives like XLG, USMC assigns substantially different weights to its 42 holdings. Magnificent Seven exposure is 33% compared to 53% for XLG. The fund's prospectus indicates managers assign greater weight to stocks expected to be less volatile, but my analysis found little evidence this was the case. USMC's five-year beta is 1.03.

Principal U.S. Mega-Cap ETF is an actively managed fund that primarily invests in U.S. mega-cap companies. The USMC ETF's active, rules-based framework provides durability and stability during market volatility. The fund's heavy concentration in the technology sector could pose a risk if the sector underperforms.