Ken Griffin has made big bucks primarily from picking stocks for his Citadel Advisors hedge fund. His net worth stands at roughly $43 billion. Big bucks indeed.
However, Griffin's fortune doesn't stem exclusively from investing in individual stocks. The billionaire has also poured money into exchange-traded funds (ETFs). Here are two ETFs that Griffin is buying hand over fist.
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1. SPDR S&P 500 ETF Trust
Citadel's largest holding isn't a stock; it's an ETF. Griffin's hedge fund owned 5.6 million shares of the SPDR S&P 500 ETF Trust(NYSEMKT: SPY) valued at $3.05 billion as of June 30, 2024. This total was much lower three months earlier. Griffin bought around 2.03 million additional shares of the ETF in the second quarter of 2024, increasing Citadel's stake by 56.7%.
The SPDR S&P 500 ETF Trust became the first ETF listed in the U.S. in January 1993. Today, it's the largest ETF based on assets under management (AUM) with assets of $603.7 billion. The SPDR ETF also ranks as one of the most actively traded ETF.
This ETF attempts to track the performance of the S&P 500 Index. Its top holdings include several of the largest companies around: Apple, Nvidia, Microsoft, Amazon, Facebook parent Meta Platforms, and Google parent Alphabet.
Why does Griffin like this ETF so much? There are several likely reasons.
The billionaire is a fan of diversified portfolios, as evidenced by the 5,800+ holdings in Citadel's portfolio. The SPDR S&P 500 ETF Trust provides an easy way to invest in the 500 biggest U.S. companies in one fell swoop.
This ETF has also been a big winner. Since its inception in 1993, the fund has delivered an average annual return of nearly 10.5%. In 2024 alone, it's up close to 23%.
SPY Chart
2. Invesco QQQ Trust
Citadel's second-largest holding is also an ETF, the Invesco QQQ Trust(NASDAQ: QQQ). As of June 30, 2024, the hedge fund owned 3.3 million shares of the fund valued at $1.58 billion. And Griffin aggressively added to Citadel's position in the Invesco QQQ Trust in Q2, buying roughly 2.82 million shares that boosted his hedge fund's stake in the ETF by nearly 585%.
The Invest QQQ Trust ranks as the fifth-largest ETF based on AUM. Over the last three months, its average daily share volume trailed only the SPDR S&P 500 ETF Trust.
This ETF attempts to track the performance of the Nasdaq-100 Index. It owns shares of the 100 largest stocks traded on the Nasdaq Stock Market. The fund's top holdings include Apple, Microsoft, Nvidia, Broadcom), Meta Platforms, and Amazon.
Griffin probably likes the Invesco QQQ Trust for the same reasons he likes the SPDR S&P 500 ETF Trust. The ETF provides a simple way to invest in a large basket of stocks. It has been an even bigger winner than the SPDR ETF, with Lipper ranking it as the best-performing large-cap growth fund based on total return over the past 15 years.
Are these ETFs good picks now?
The main knock against both the SPDR S&P 500 ETF Trust and Invesco QQQ Trust is valuation. The stocks owned by the SPDR ETF trade at an average price-to-earnings ratio of 28.1. The average earnings multiple for stocks owned by the Invesco ETF is even higher at 37.7.
However, I think both of Griffin's favorite ETFs remain good picks for long-term investors. These funds own the biggest and arguably best stocks on the market. They regularly rebalance to replace laggards with other stocks that are on the rise. I expect both the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust will continue to be big winners over the next decade and beyond.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
