Two Sector ETFs Are Quietly Outperforming the S&P 500 Without a Single AI Stock

"Prognostications that the AI bubble is grossly overbought have been increasing. The fact that the Magnificent 7 AI stocks, such as Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), and the others have led the S&P 500's multi-year bull run has given numerous investors consternation over their portfolios. The S&P 500's 16% YTD gains and the reality that the Magnificent 7 are widely held in hundreds, and potentially thousands of ETFs means that a repeat of the dotcom bubble burst could cause massive panic"

"Retirees who are holding ETFs containing Magnificent 7 or other AI stocks like Palantir (NASDAQ: PLTR) might wish to diversify into other ETFs without AI exposure. The challenge is in how to find such ETFs, given that thousands hold at least a few of the Magnificent 7 stocks and have had them for years. Luckily, there are plenty of ETFs that focus on other sectors and boast some strong examples of substantial, double-digit YTD gains of their own."

"Two that may be worth consideration are in the biotech arena and in mining: The State Street SPDR S&P Biotech ETF (NYSE: XBI) and iShares MSCI Global Silver and Metals Miners ETF (CBOE: SLVP). State Street SPDR S&P Biotech ETF The biotech industry, aligned with healthcare, has had a choppy trajectory since its pandemic era highs. XBI, which tracks the S&P Biotechnology Select Industry portion of the S&P Total Market Index, debuted on January 31, 2006."

Predictions of an overbought AI bubble have risen as the Magnificent 7 AI stocks propelled the S&P 500's multi-year bull run. The S&P 500's 16% year-to-date gain and the inclusion of Magnificent 7 holdings across hundreds or thousands of ETFs create concentration risk. Retirees with AI-heavy ETFs may seek diversification into non-AI ETFs, but finding funds without any Magnificent 7 exposure is difficult. Sector-focused ETFs provide alternatives. The State Street SPDR S&P Biotech ETF (XBI) and iShares MSCI Global Silver and Metals Miners ETF (SLVP) are cited examples. Biotech benefited from breakthroughs in cancer treatments, gene editing, cell therapies, obesity, and tissue engineering, and XBI returned 25.19% YTD as of early November.

Read at 24/7 Wall St.