Title: Billionaire Ken Griffin Bolsters Citadel's Stake in this Unyielding ETF by 277%
Title: Billionaire Ken Griffin Bolsters Citadel's Stake in this Unyielding ETF by 277%
Every three months, fund managers with at least $100 million in market investments must submit a Form 13F to the Securities and Exchange Commission (SEC). These filings reveal the stocks that these money managers buy and sell, giving us a glimpse into the companies that major players on Wall Street are backing.
Consider Ken Griffin, the billionaire CEO of Citadel Advisors and widely regarded as one of the top money managers out there. Logically, he and his team must be privy to some hidden gems and perfect timing, right?
Surprisingly, sometimes, the best opportunities are the most obvious ones. During the third quarter, Citadel ramped up its stake in the Vanguard S&P 500 ETF by an impressive 277% - purchasing over 398,000 shares. Even one of the most influential investors in the world is banking on the S&P 500.
Let's examine why Griffin's decision is a smart one and why the Vanguard S&P 500 ETF might just be a game-changer for individual investors with a long-term perspective.
What sets the Vanguard S&P 500 ETF apart?
First off, it's crucial to establish that while Citadel's portfolio is massive – encompassing over $95 billion in assets and more than 5,700 positions – the Vanguard S&P 500 ETF makes up only a tiny fraction of the entire fund. Approximately 0.30% of the Citadel fund is tied to the ETF.
Nevertheless, there's a larger idea that merits attention. Griffin is employing a smart strategy by investing not only in individual stocks but also in the broader market through the S&P 500. This approach safeguards the fund against potentially volatile or speculative positions – providing some insulation from market turbulence.
The Vanguard S&P 500 ETF's investment strategy might be one reason that attracts Griffin. It is constructed with market capitalization weighting. Essentially, this means that large contributing companies, such as Apple, Microsoft, Nvidia, or Eli Lilly, have a significant impact on how the fund performs. At the same time, smaller stocks balance out the fund – offering a diverse investment landscape across different sectors.
How has the Vanguard S&P 500 ETF fared over time?
The graph below demonstrates the total return of the Vanguard S&P 500 ETF compared to other notable S&P 500-themed index funds over the past decade.
While the Vanguard S&P 500 ETF leads the pack, it narrowly edges out the SPDR S&P 500 ETF in terms of long-term performance. This close competition is not altogether surprising, as both funds rely on market-capitalization weighting to track the S&P 500.
However, the Vanguard S&P 500 ETF shines when it comes to cost. With an expense ratio of just 0.03%, it offers a more reasonable price compared to the SPDR ETF, which charges a 0.0945% expense ratio.
Why is the Vanguard S&P 500 ETF worth consideration?
The fee investors pay to money managers is just one part of the equation. The more significant factor is the market's potential growth. Although history points to 2025 as another positive year for the market, it's essential not to become fixated on specifics. Remember, the stock market has proven remarkable resilience during challenging times – and, over the long term, it tends to rise.
Moreover, the Vanguard S&P 500 ETF has delivered substantial long-term returns – even during periods of volatility, such as the COVID-19 recession in 2020 and the rampant inflation and aggressive interest rate hikes in 2022. Regardless of the hurdles faced, the S&P 500, as well as the funds analyzed here, performed admirably.
To me, the Vanguard S&P 500 ETF is an attractive option for investors with a long-term focus. It serves as an excellent complement to individual positions by providing broader market exposure. Its low-cost structure, solid historical performance, and resilience make it an appealing choice for those who are patient and understanding that the stock market's engine long-term growth.
- Given Ken Griffin's decision to significantly increase Citadel's stake in the Vanguard S&P 500 ETF, it indicates that he sees value and potential for growth in this investment, highlighting the ETF's appeal to even the most influential money managers in finance.
- For individual investors with a long-term perspective, the Vanguard S&P 500 ETF can be an attractive option, as it offers a diversified investment in the broader market, follows a low-cost structure, and has demonstrated resilience and strong performance over time, making it a potential game-changer in their investment portfolio, akin to what major players like Citadel are doing in finance.