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Investors have poured record amounts of money into a fund that evenly spreads its holdings across the S&P 500, as concerns grow that Wall Street’s returns have become overly dependent on a handful of tech titans.

The Invesco S&P 500 Equal Weight exchange traded fund took in about $14.4bn in the second half of 2024, according to data from Morningstar, as investors hedged against the dominance of big technology stocks.

The surge took total inflows for the fund to $17bn for the year and comes after consecutive years of the fund underperforming the S&P. Analysts say this highlights how investors are worried about the shadow cast by Magnificent Seven tech stocks – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

Last year the S&P rose 24 percent, with seven responsible for about half of the index’s gains, according to S&P Dow Jones Indices. The equal weight index only increased by 11 percent as its quarterly rebalance favored low growth stocks.

“The biggest focus of investors recently is the risk of concentration, worried that the market is too heavy,” said Manish Kabra, head of US equity strategy at Société Générale. He expects to see double-digit revenue growth beyond the biggest tech companies this year.

“When that happens, you don’t need to be in a very defensive position,” he said, adding that “many people I know point to the same weighted index that gained 11 percent last year and say that makes more sense to invest there than to expect 20-plus returns (from the market-cap weighted S&P 500) every year.

Invesco’s fund sells S&P leaders and buys its laggards every quarter when it balances, to give each of its holdings an equal share of the fund’s assets. That approach was useful in 2022, as the largest stocks in the index suffered heavy selling that year.

Despite its poor performance, the fund has amassed more than $72bn and makes it one of the 25 largest US ETFs by total assets, according to Morningstar. That showing topped the ETF’s previous best for flows of nearly $12.8bn by 2023, according to Morningstar.

Investors also turned to derivatives, such as CME Group’s S&P 500-equal weight futures, to bet on the S&P while hedging against a sharp decline in tech stocks. The contract, launched in February, has averaged open interest of 16,500 contracts this month, worth about $2.4bn.

A sharp decline in shares of the Magnificent Seven in July and August led to a jump in interest in the contract, said CME global head of equity products Paul Woolman. “I think that has awakened some clients to how to manage that risk and what kind of strategies they need to put in place.”

“This is a reflection of market participants who want to diversify into cheaper assets and not just chase performance,” said Alessio de Longis, head of investments at Invesco Solutions, a multi- asset arm of the $1.8tn fund manager, in the general flow to the interest of equal-weighting.

However, Bryan Armour, research director of passive strategies at Morningstar, said that using a fund that is adjusted to give each company equal weight may not be the best way to avoid those. fear of market concentration.

“Incorporating each company’s valuation criteria will serve investors better than arbitrarily giving them all the same weight,” Armor said. “At the very least, that would better reflect the identity of the market.”

T Rowe Price portfolio manager Rick de los Reyes said the shift in sentiment would help sectors such as energy, metals, mining and other industrial stocks. “There’s some excitement around the rest of the market, and it looks like you’re finally going to see some strength,” he said.