BlackRock has just launched a new ETF — the iShares S&P 500 3% Capped ETF TOPC — and it's a pretty interesting move in response to growing concerns about market concentration. The ETF tracks the S&P 500 3% Capped Index, which limits the weighting of individual stocks to no more than 3%.
This approach redistributes excess weight from mega-cap stocks like Big Tech (which has been underperforming this year) to smaller constituents within the index, aiming to provide a more balanced market exposure.
Note that the Big Tech stock-focused fund — Roundhill Magnificent Seven ETF MAGS — has lost 21.6% so far this year (as of April 17, 2025).
Inside TOPC
The fund’s five holdings are: Microsoft (3.02%), Apple (2.87%), NVIDIA (2.77%), Amazon (2.74%) and Meta (2.55%). Financial Services (10.16%), Software & Services (9.01%) and Media & Entertainment (7.73%) are the top three sectors of the fund. TOPC’s expense ratio is 0.15% and net expense ratio is 0.09%.
In contrast, the regular S&P 500 ETF VOO puts 7.24% focus on Apple, followed by NVIDIA (6.07%), Microsoft (5.84%), Amazon (3.93%) and Meta (2.88%). The VOO ETF charges 3 bps in fees (read: 5 Good ETFs to Invest in and Forget).
Diversification Offered by TOPC
By capping the influence of large-cap companies like Apple, Microsoft and NVIDIA — which have recently surpassed 6% each in uncapped benchmarks — TOPC encourages greater issuer and sector diversification.
Part of the iShares Build Suite
TOPC is part of BlackRock’s iShares Build suite — a collection of core, low-cost ETFs intended for both retail and institutional investors. Following a recent expense reduction, TOPC now offers a competitive net expense ratio of 0.09%, making it an accessible option for those seeking strategic market exposure.
How Does It Fit in the Portfolio?
As a handful of tech giants increasingly dominate the market, TOPC is as a timely innovation for those looking to reduce concentration risk while retaining broad-market participation.
To ensure continuous exposure, especially during index rebalancing periods, the ETF is permitted to allocate up to 20% of its net assets to futures, options, or cash strategies. This flexibility supports the fund’s goal of maintaining consistent and diversified coverage of the S&P 500 universe.
Any Competition?
While most S&P 500-based ETFs follow the regular index,Invesco S&P 500 Equal Weight ETF RSP is a little different and can offer competition to the newbie TOPC.
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This article originally published on Zacks Investment Research (zacks.com).
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