ETFs
Hedge fund “Mag 7” exposure hits record: ETFs to exploit
The “Magnificent 7” — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META) — were originally of the market recovery. this year on the craze for artificial intelligence (AI).
Buoyed by the AI boom and NVIDIA’s bumper profits, hedge funds have increased their exposure to US tech giants to a record level. According to the latest report from brokerage Goldman Sach, Magnificent 7 companies account for about 20.7% of hedge funds’ total net exposure to individual U.S. stocks. This represents the highest level on record and exceeds the previous peak of 20% seen last summer.
NVIDIA alone has added about $470 billion in market capitalization since reporting its results on May 22 (read: Can NVIDIA’s AI chip dominance continue?).
Additionally, the Magnificent 7 achieved a weighting of 31% in the S&P 500.
ETF to exploit
Investors looking to tap into hedge fund activity might consider the ETFs with the most exposure to Magnificent 7.
Roundhill Magnificent Seven ETF (MAGS)
The Roundhill Magnificent Seven ETF is the first-ever ETF offering investors equal-weighted exposure to “Magnificent Seven” stocks. It has amassed $330.1 million in its asset base and charges 29 basis points in fees annually. MAGS trades in an average daily volume of 199,000 shares (read: ETFs to tap as investors become most bullish since November 2021).
MicroSectors FANG+ ETN (FNGS)
This ETN is linked to the performance of the NYSE FANG+ Index, which is equal dollar weighted and designed to provide exposure to a group of highly traded growth stocks of technology and next-generation technology companies. The stock represents a 10% stake in each of these seven stocks. MicroSectors FANG+ ETN has accumulated $276.1 million in its asset base and charges 58 basis points in annual fees. It trades in a moderate volume of 142,000 shares per day on average and has a Zacks ETF Rank #3 (Hold).
Vanguard Mega Cap Growth ETF (M.G.K.)
The Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 79 stocks in its basket, with the Magnificent Seven collectively representing 57.7% of total assets. The Vanguard Mega Cap Growth ETF charges 7 basis points in annual fees and trades a good volume of around 282,000 shares per day on average. The fund has $19.8 billion in assets under management and a Zacks ETF Rank #2 (Buy).
Invesco S&P 500 Top 50 ETF (XLG)
The Invesco S&P 500 Top 50 ETF tracks the S&P 500 Top 50 ETF Index, which measures the capitalization-weighted performance of the largest companies in the S&P 500 Index, reflecting the performance of large-cap U.S. stocks. He holds 54 stocks in his basket and Magnificent Seven accounts for a combined 53.2% share. The Invesco S&P 500 Top 50 ETF was able to manage assets worth $4.4 billion, but trades a good volume of around 1.2 million shares per day on average. XLG charges 20 basis points in annual fees and is the #3 Zacks ETF (read: ETFs Should Bet on Analysts’ Bullish Forecasts for the S&P 500).
iShares S&P 100 ETF (OEF)
The iShares S&P 100 ETF provides exposure to the 101 largest U.S. companies. Magnificent Seven represents a combined share of 45.2%. The iShares S&P 100 ETF has amassed $12.3 billion in its asset base and charges 20 basis points in annual fees. It trades an average daily volume of 194,000 shares and has a Zacks ETF Rank #3.
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Invesco S&P 500 Top 50 ETF (XLG): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
iShares S&P 100 ETF (OEF): ETF Research Reports
Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports