TOPT Holds 16% in NVIDIA Alone, and That Concentration Is Driving Its 11% Loss

iShares Top 20 U.S. Stocks ETF (NYSEARCA:TOPT) is down 11.06% year-to-date, and that descent traces straight backmost to the fund's defining feature: a portfolio truthful concentrated successful a fistful of mega-cap exertion names that a atrocious agelong for those stocks is, by definition, a atrocious agelong for the fund.

TOPT tracks the S&P 500 Top 20 Select Index, holding precisely 20 U.S. companies ranked by marketplace capitalization. The entreaty is straightforward: ain lone the largest, astir ascendant businesses successful the state and fto standard bash the work. Since its October 23, 2024 inception, the money has attracted $473 cardinal successful assets and charges a thin 0.20% disbursal ratio. For investors who judge the biggest companies support winning, TOPT offers a clean, low-cost conveyance to marque that bet.

The occupation is that "20 largest companies" does not mean "20 diversified companies." The portfolio is built astir wholly astir exertion and technology-adjacent businesses, and 3 stocks unsocial transportation the value of astir fractional the fund.

TOPT's apical 3 holdings, NVIDIA, Apple, and Microsoft, correspond a combined 40.36% of the portfolio. NVIDIA unsocial accounts for 16.1%. Zoom retired and the representation sharpens: 46% of the money sits successful Information Technology, with nary vulnerability to Industrials, Materials, Utilities, oregon Real Estate.

This is not theoretical. NVIDIA has fallen 14.33% implicit the past period and is down 10.17% year-to-date. Because NVIDIA represents astir one-sixth of TOPT's full portfolio, that drawdown flows straight into the fund's NAV. TOPT itself is disconnected 9.11% implicit the past month, tracking NVIDIA's diminution astir successful lockstep.

A Seeking Alpha investigation by Jeffrey Fischer, CFA published successful January 2025 flagged this dynamic explicitly, arguing that TOPT's strategy "risks removing large-cap stocks during impermanent dips and its dense banal and assemblage weighting increases risk." The interest is structural: erstwhile the scale methodology forces the money to clasp a fixed 20 names weighted by marketplace cap, immoderate repricing of the apical 2 oregon 3 positions ripples done the full portfolio with nary buffer from different sectors.

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