The Technology Select Sector SPDR Fund, a major technology exchange-traded fund, is undergoing a significant overhaul this month. This adjustment will increase exposure to NVIDIA Corp at the expense of Apple Inc, resulting in billions of dollars in trading volume.
The shift comes after Nvidia’s market value surpassed Apple’s on Friday. State Street Capital Advisors, the manager of the $71 billion Technology Select Sector SPDR Fund, intends to restructure the fund by buying $11 billion of Nvidia shares and selling $12 billion of Apple shares. This will cause Nvidia’s weight in the fund to exceed 20%, while Apple’s weight will drop to 4.5%.
Matt Bartolini, head of SPDR Americas Research at State Street, explained that the rebalancing is necessary to comply with diversification regulations and track the S&P benchmark. S&P has indicated that it may make exceptions to its methodology based on specific circumstances.
The index committee of S&P will be announcing sector weightings at the end of the month, with the possibility of exceptions to the rules stated in the methodology. Clients will receive notifications regarding any changes to the standard rules.
The Technology Select Sector SPDR Fund closed at $231.12 on Monday, with a 1.52% gain
