Billionaire Ken Griffin bought these 2 Hand Over Fist ETFs in Q2

Few investors have been as adept at picking stocks as Ken Griffin. He is worth almost 38 billion dollars. He founded Citadel in 1990. It has since become the most successful hedge fund of all time.

However, Griffin’s two biggest purchases in the second quarter of 2024 were not individual stocks. Instead, the billionaire investor bought shares of two exchange-traded funds (ETFs) handed down in Q2.

Griffin’s Large ETFs are buying

The Citadel’s biggest holding — by far — is SPDR S&P 500 ETF Trust (SPY 0.22%). Griffin likes this ETF so much that he bought over 2 million additional shares in Q2, increasing his hedge fund’s holdings by about 56.7%.

As the name suggests, this ETF tries to track performance S&P 500 index. The SPDR S&P 500 ETF Trust was the first ETF listed in the US. It ranks as the largest ETF in the market based on assets under management (AUM) and is one of the most heavily traded ETFs in the world.

Another ETF is now Citadel’s second largest holding: the Invesco QQQ ETF (QQQ 0.13%). Citadel bought 2.82 million shares of the ETF in Q2. That boosted the hedge fund’s position in the Invesco QQQ ETF by nearly 585%.

The Invesco QQQ ETF is tracking Nasdaq-100 index, which includes the 100 largest non-financial companies traded on the Nasdaq exchange. Launched in 1999, the ETF ranks 5th by AUM and is among the 10 most traded ETFs.

Why did Griffin load up on these two ETFs?

Griffin typically doesn’t comment publicly on his quarterly investment deals, so it’s no surprise that he hasn’t done so for recent ones. However, we can make some educated guesses as to why it loaded up on these two ETFs.

One potential reason behind Griffin’s aggressive buying of these funds is that he remains bullish on the US economy and large-cap stocks in particular. The SPDR S&P 500 ETF Trust provides an easy way to invest in the 500 largest US companies. The Invesco QQQ ETF portfolio includes the largest stocks traded on the Nasdaq, many of which are also in the S&P 500.

Griffin may also remain bullish on the outlook for companies focusing on artificial intelligence (AI). Nine of the top 10 stocks in the Invesco QQQ ETF are AI stocks. Eight of the SPDR S&P 500 ETF Trust’s top 10 holdings are AI stocks.

The hedge fund manager is also likely to prize the diversification offered by both ETFs. He managed to gain positions in 503 stocks with the SPDR fund and 101 stocks with the Invesco fund.

Should You Buy These ETFs Too?

It is not smart to make personal investment decisions based solely on what a famous and wealthy investor is doing. However, the underlying reasons why someone like Griffin buys shares of the SPDR S&P 500 ETF Trust and the Invesco QQQ ETF might appeal to you.

Let’s say Griffin did buy these two ETFs because he’s bullish on the economy and AI stocks and wanted to diversify. Should you buy them for the same reasons? I think they are good choices, but I also think there are even better ETFs with lower costs.

Instead of SPDR S&P 500 ETF Trust, consider Vanguard 500 ETF. Both ETFs track the S&P 500. However, the Vanguard fund’s annual expense ratio is just 0.03% versus 0.0945% for the SPDR ETF.

Likewise, the Vanguard Mega Cap Growth ETF holds many of the same shares in the Invesco QQQ ETF. But the Vanguard ETF’s expense ratio of 0.07% is much lower than the Invesco ETF’s expense ratio of 0.2%. It has also outperformed the Vanguard fund over the past 12 months.