Investing.com – Analysts at UBS are downplaying expectations that volatility for the big tech exchange-traded fund will spike if it rebalances as Nvidia overweights Apple.
Speculation about major changes to The Technology Select Sector SPDR® Fund (NYSE:), one of the largest technology ETFs on Wall Street, intensified this week after artificial intelligence darling NVIDIA Corporation (NASDAQ:) briefly overtook Apple Inc. (NASDAQ:) as the second largest listed company in the world.
It also raised questions about the ETF’s rising implied volatility, given that Nvidia trades at substantially higher implied volatility than Apple after the chipmaker saw its valuation rise significantly over the past year.
But UBS analysts said the overall increase in index volatility would be limited after such potential rebalancing, at less than 1 point.
Additionally, the ETF’s rebalancing also depends on Nvidia’s floating adjusted market cap closing above Apple on Friday. But Apple has overtaken Nvidia in valuation over the past three sessions to become the most valuable company on Wall Street as investors cheered the iPhone maker’s plans to add artificial intelligence to its products.