Principal Financial Group 13F Portfolio

Principal’s biggest buy by far was LCAP, where it lifted exposure by +1573.5%, adding about $1.51B and turning what had been a rounding error into a 0.79% position. That is a deliberate asset-allocation call: internal large-cap factor exposure is now a true building block of the book, not a sidecar.

USMC, another Principal ETF, also saw a meaningful +7.1% share increase and about $159.0M of fresh capital. Together, those moves say they prefer to express part of their U.S. equity view via rules-based, fee-capturing internal vehicles rather than adding more stock-by-stock idiosyncratic risk.

On the single-name side, the rising conviction is all about AI plumbing:

• Micron was boosted +6.5%, adding roughly $117.7M. That’s a clear bet that high-bandwidth memory remains a scarce asset in the AI buildout.
• AMD climbed +9.7% on the quarter (about $104.7M added), reinforcing the view that competition to Nvidia in accelerators has legs.
• Lam Research was nudged up +4.6%, and Entegris modestly higher as well, signaling confidence in the wafer fab and materials ecosystem that sits behind all the AI headlines.
• Outside semis, Veeva’s +20.2% increase stands out. They are leaning into vertical software in life sciences, tying together their enthusiasm for health care with a preference for subscription-like, workflow-critical businesses.

Smaller but consistent adds to Eli Lilly and Johnson & Johnson fit this pattern: durable cash-generators in structurally advantaged niches, rather than broad health-care beta.

On the sell side, Principal is not panicking; it is pruning. The largest trims by dollars are all long-held winners or fully valued cyclicals that can painlessly fund higher-conviction themes.

In tech and consumer internet, Amazon was cut -10.8% (about -$491.8M), Microsoft -8.5% (-$476.0M), and Alphabet’s main line -6.7% (-$267.6M). These aren’t thesis reversals; they are classic risk-budget reallocations after multi-hundred-percent gains versus cost. Meta and the GOOG line were also shaved.

Cyclicals took heavier percentage cuts. TransDigm was reduced -15.1% (-$405.8M), Heico’s A shares -13.1% (-$299.0M), and Vulcan Materials -17.7% (-$346.8M). O’Reilly Automotive saw an even steeper -21.4% reduction (-$355.3M). Those moves suggest less appetite for richly valued aerospace and late-cycle U.S. construction plays after a strong run.

Real assets and rate-sensitive names are being sorted into winners and laggards rather than abandoned wholesale. Brookfield Corp was hit hard at -13.7% (-$373.3M), while Ventas, Prologis, Extra Space, and American Tower all saw moderate trims. On the consumer side, cuts to Hilton, Live Nation, Yum China and Hyatt imply a cooling view on travel and experience-heavy discretionary demand as a source of outperformance.

The sector bars tell a subtle but important story: Principal is creeping its already-massive tech weight higher while bleeding cyclically exposed buckets. Technology rose from 38.99% to 39.41% of the disclosed book, even as they trimmed marquee names. That rise is powered by adds to Micron, AMD, Lam Research, Veeva and Taiwan Semi rather than more exposure to the megacap platforms.

Real estate as labeled in the data dips from 15.26% to 14.87%, but that category is muddied by misclassified payment networks. The real read is that classic REITs are mildly down, with selective adds (Welltower) offset by trims in data centers, self-storage, and towers.

Consumer discretionary steps down more clearly, from 15.01% to 13.71%, reflecting broad-based cuts across e-commerce, autos, travel, and leisure. Industrials also ease from 10.29% to 9.84%, led by those big reductions in TransDigm, Vulcan and O’Reilly. Meanwhile, Finance inches up from 6.02% to 6.21%, Health Care from 2.44% to 2.55%, and the unclassified sleeve (dominated by Principal’s own ETFs and Berkshire) jumps from 10.12% to 11.61%.

Net-net, the book is being nudged away from rate- and cycle-sensitive exposures and toward AI infrastructure, health-care quality, and internal factor products that smooth idiosyncratic risk.

Taken together, this quarter’s moves read as a vote that AI is a durable capital cycle, but the easy platform trade is behind us. Principal is sticking with Nvidia, Broadcom and the broader semi stack, while rebalancing away from the most crowded megacap software and e-commerce winners.

Ramping LCAP and USMC into meaningful positions signals a structural decision to express more of the U.S. equity view through factorized internal products. That both diversifies away single-name risk and keeps economics in-house — a very “large asset owner” way to de-risk after a powerful run.

The trims in consumer discretionary, aerospace, and construction materials, alongside modest adds in health care and infrastructure-like assets, look like late-cycle risk management rather than a macro call on recession. They are content to let high-multiple cyclicals shrink as sources of outperformance, while leaning into cash-rich franchises and structural growers.

Forward-looking, expect Principal to keep rotating within tech — from front-end platforms to picks-and-shovels — and to keep scaling internal ETFs as core allocation tools. Unless macro or AI fundamentals break, this book is set up to participate in further upside with less reliance on a narrow handful of consumer and software champions.