How can I invest in big US stocks but avoid Tesla?

Q: How do I find collective investments that exclude Tesla without compromising on my exposure to US large caps?

A: We’ve found a few funds that meet your needs. Ordinary, ‘open-ended’ funds often disclose no more than their top 10 holdings, which makes it impossible to determine whether they hold a particular stock. Therefore many of the funds we name here are investment trusts. Bear in mind too that full portfolio disclosures can be months out of date so things may have changed since lists of holdings were last published.

The Blue Whale Growth Fund has plenty of exposure to large US stocks – 70% of its money is in North America and its top 10 holdings include Nvidia and Oracle – but it has no Tesla. Its manager, Stephen Yiu, told Fidelity this week: ‘We’ve never owned Tesla since the fund’s inception in 2017, and it is unlikely we will ever consider it, based on today’s extreme valuation, which is attributed to Mr Musk rather than its business fundamentals.’

The JPMorgan American Investment Trust sold its stake in Tesla last year and Mr Musk’s company did not feature on its full list of holdings at the end of December. But the trust has large stakes in many of the big US stocks to have driven the recent period of American ‘exceptionalism’; its top 10 includes Amazon, Microsoft, Nvidia, Meta (Facebook) and Apple, as well as Berkshire Hathaway, Warren Buffett’s company. Analysts at Stifel, the broker, said this week that the trust had 27% of its money in the ‘magnificent seven’ tech stocks despite its avoidance of Tesla.

Stifel’s analysis of investment trusts’ exposure to the magnificent seven also found that several global trusts had significant holdings in other members of the group but none in Tesla. It said Monks had 18.8% in other members of the mag seven but no exposure to Tesla (although it has 0.5% of assets in SpaceX, Mr Musk’s unlisted space company); Bankers also had 18.8% in others but no Tesla; Alliance Witan had 13.5% in the ‘mag-seven-minus-Tesla’ but nothing in Tesla itself; Brunner had 10.7% in the others but no Tesla; Scottish American had 4.3% in Microsoft but no other magnificent seven stocks.

The broker also looked at technology trusts and found that Allianz Technology had no Tesla but had 41% of its assets in the rest of the magnificent seven. Meanwhile Manchester & London, a tech-heavy investment trust, has extremely large exposure to other mag seven members – 36% of the portfolio in Nvidia and 25.5% in Microsoft, as well as 4.4% in Alphabet (Google) and 2.9% in Apple – but no Tesla. The trust’s manager, Mark Sheppard, told Fidelity: ‘Tesla has a valuation multiple that looks like SpaceX launched it.’

The North American Income Trust had no holding in Tesla at the end of 2024. Even though it is an income fund it does have stakes in some of the big US growth names, such as Alphabet and Microsoft. 

BlackRock American Income’s latest factsheet, published this month, shows that Tesla does not feature among its top 10 holdings; neither is the company to be found in the full portfolio listing in the most recent interim report. However, those interims do date back to April last year. Current large holdings include Citigroup, Kraft Heinz and Wells Fargo. Pershing Square Holdings, which is run by the Wall Street billionaire Bill Ackman and has holdings in American giants such as Alphabet and Universal Music, has no stake in Tesla. 

Several Baillie Gifford open-ended funds – Global Alpha Growth, Global Discovery, Global Income Growth, Sustainable Growth, Monthly Income and Positive Change – have no Tesla, a spokeswoman told Fidelity.

Tesla is not currently included in the Dow Jones Industrial Average, so a passive fund that tracks the ‘Dow’ would also have no exposure to Mr Musk’s company. If you could tolerate a very small holding, a fund that tracks the ‘equal-weighted’ version of the S&P 500 index, which offers equal exposure to all 500 constituent companies, would fit the bill: such a fund would have just 0.2% (one 500th) of its money in the stock. Options include an Invesco fund and one from iShares.

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Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Overseas investments will be affected by movements in currency exchange rates. Investment trust shares are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.