A long-term 'buy and hold' approach is recommended, with investors allocating about 10% of their portfolio to XOEF, pairing it with small-cap ETFs for diversification, and avoiding overconcentration in traditional mega-cap funds.

Critics worry about a rebound in mega-caps, but many top stocks have underperformed recently, and XOEF's portfolio includes recession-resistant companies like Darden Restaurants, offering resilience.

Launched on July 9, 2025, XOEF seeks to capitalize on overlooked large-cap stocks outside mega-cap giants like Apple, Microsoft, Amazon, and Tesla.

BlackRock has launched the iShares S&P 500 ex Top 100 ETF (XOEF), marking the first ETF to exclude the top 100 companies of the S&P 500, aiming to provide more precise large-cap exposure in the U.S. equity market.

XOEF is designed to track an index of large-cap U.S. stocks within the S&P 500, excluding those in the S&P 100, allowing investors to target the remaining large-cap segment for diversification and specific exposure management.

The ETF complements existing mega-cap funds such as the iShares S&P 100 ETF (OEF) by enabling more targeted and diversified large-cap investments, addressing the rising concentration in mega-cap stocks over the past two decades.

The 'mega-cap trap' has led to nearly half of the S&P 500's value being concentrated in the top 100 stocks, while 70% of companies outside this group exhibit higher revenue growth, benefiting from their agility and niche market leadership.

XOEF emphasizes sector diversification, with 40% in industrials, healthcare, and utilities, and offers a lower expense ratio of 0.20%, providing a cost-effective way to access this segment.

BlackRock manages over $22 billion across its Build ETFs lineup, reflecting the growing demand for targeted building blocks for U.S. equity exposure.

Jay Jacobs, U.S. Head of Equity ETFs at BlackRock, highlighted that XOEF offers investors a new lever to manage mega-cap concentration with greater precision in today’s market environment.

Market conditions—higher interest rates, geopolitical tensions, and economic slowdown—favor smaller, more agile companies, making XOEF potentially more resilient than traditional mega-cap stocks.

Strategic reasons for investing include lower valuation ratios (P/E 15% lower than the full index), exposure to under-the-radar growth sectors like cybersecurity and biotech, and BlackRock’s strong track record managing over $22 billion in ETFs.