Advisor Boosts $14 Million Bet on U.S. Mega-Cap ETF as Markets Lean Back Into Giants

Wealth Advisors of Iowa, an independent financial planning company, disclosed a substantial increase in its stake in the Principal U.S. Mega-Cap ETF (NASDAQ:USMC) during the third quarter, adding 144,585 shares, according to an SEC filing dated November 14.

What Happened

According to a filing with the Securities and Exchange Commission (SEC) dated November 14, Wealth Advisors of Iowa increased its stake in the Principal U.S. Mega-Cap ETF (NASDAQ:USMC) by 144,585 shares. The total position value rose to $14.16 million, up from the prior quarter, with the stake now representing 4.82% of the fund’s reportable U.S. equity assets.

What Else to Know

Top holdings after the filing:

• NASDAQ: JEPQ: $34.37 million (11.7% of AUM)
• NYSEMKT: RSP: $28.30 million (9.6% of AUM)
• NYSEMKT: EFAV: $26.19 million (8.9% of AUM)
• NYSEMKT: SPYM: $25.13 million (8.6% of AUM)
• NYSEMKT: SPYV: $21.13 million (7.2% of AUM)

As of Friday, shares of USMC were priced at $67.77, up about 13% over the past year and slightly underperforming the S&P 500, which is up about 16.5% in the same period.

ETF Overview

ETF Snapshot

• USMCv's investment strategy focuses on allocating at least 80% of assets to equity securities of U.S. mega-cap companies, targeting firms in the top 50th percentile of the S&P 500 by market capitalization.
• The portfolio is composed primarily of large, established U.S. companies, providing broad exposure to the mega-cap segment of the U.S. equity market.
• The fund operates as an exchange-traded fund (ETF) aiming for efficient access to large-cap equity performance.

The Principal U.S. Mega-Cap ETF (USMC) offers investors diversified exposure to the largest U.S. companies by market capitalization, leveraging a rules-based approach to portfolio construction. The fund's strategy is designed to capture the performance of established industry leaders within the S&P 500, appealing to investors seeking stability and growth potential from mega-cap equities. With a significant asset base and a focus on liquidity and transparency, USMC is positioned as a core holding for institutional and long-term investors targeting the U.S. mega-cap segment.

Foolish Take

In a market where returns have become increasingly concentrated, incremental dollars flowing into mega-caps suggest advisors are prioritizing durability over drama. This ETF is designed to do exactly that: overweight the largest U.S. companies while dampening risk through diversification and balance-sheet quality.

As of the third quarter, the fund held roughly $3.6 billion in net assets and carried a five-star Morningstar overall rating among large-blend funds, reflecting strong risk-adjusted returns over multiple periods. Its expense ratio sits at just 0.12%, making it a cost-efficient way to gain exposure to companies that already dominate earnings, margins, and free cash flow generation. Over the past year, the ETF delivered a total return north of 20%, modestly ahead of the S&P 500 on a risk-adjusted basis, according to fund materials.

For long-term investors, the takeaway is less about chasing upside and more about controlling downside. Mega-caps may not always lead rallies, but they tend to hold up when liquidity tightens or narratives break. In a portfolio stacked with factor ETFs and income strategies, this kind of allocation reads less like a bold call and more like a prudent one.

Glossary

Assets Under Management (AUM): The total market value of assets a fund or investment firm manages on behalf of clients.
13F Reportable Assets: Securities holdings that institutional investment managers must disclose quarterly to the SEC via Form 13F.
Exchange-Traded Fund (ETF): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Mega-cap: Companies with extremely large market capitalizations, typically among the largest in the market.
Position: The amount of a particular security or asset held by an investor or fund.
Stake: The ownership interest or amount of investment a party holds in a company or fund.
Dividend Yield: A financial ratio showing how much a company pays out in dividends each year relative to its share price.
Portfolio Construction: The process of selecting and managing a mix of investments to achieve specific objectives.
Rules-based Approach: An investment strategy that follows predefined, systematic criteria for selecting and weighting assets.
Liquidity: The ease with which an asset can be quickly bought or sold without affecting its price.
Total Return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.