The World's Largest ETF Sells Apple and Buys Nvidia

The world's largest technology-focused exchange-traded fund (ETF) is belatedly increasing its holding of Nvidia.

Bloomberg reported on the 11th (local time) that the Technology Select Sector SPDR Fund (ticker symbol XLK) has decided to significantly raise its Nvidia weighting in its portfolio.

With assets under management of about $67 billion, XLK has been evaluated as having not benefited much from the surge in tech stocks driven by the artificial intelligence (AI) wave this year. XLK's stock price increase this year is about 17%, which lags behind the S&P 500 Technology Index.

While XLK holds 23% and 21% of Microsoft (MS) and Apple respectively in its portfolio, it only held 6% of Nvidia. Nvidia has surged 145% this year, outperforming other big tech stocks in terms of gains.

According to Bloomberg, XLK's asset manager plans to buy $10 billion worth of Nvidia shares and sell $11 billion worth of Apple shares during the quarterly rebalancing at the end of this month. In this case, Nvidia's weighting in the XLK portfolio is expected to rise to 21%, surpassing Apple (20%) to become the second largest holding.

Wall Street is paying close attention to whether this move will allow XLK to optimally reflect the current sentiment in the U.S. technology sector.