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With the Nasdaq Composite and Nasdaq 100 indexes residing around record highs with a just a few trading days left in 2024, it’s safe to say this has been another ban year of performance by the magnificent seven cohort of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
For much of the year, Tesla was the laggard of the group, but the stock has recently shed that status in epic fashion and is up more than 75% year-to-date as of Dec. 13 with nearly half that gain accrued since Election Day. In other words, it’s again been rewarding to bet on the magnificent seven stocks on an individual basis and punitive to wager against those names.
Fortunately for advisors and investors, there’s a way to bet on seven of these revered stocks without the burden of having to own each individually and without interference from other equities in an active or passive fund that holds the “mag seven.” The Roundhill Magnificent Seven ETF (MAGS) solves that issue.
MAGS is the first exchange traded fund dedicated exclusively to the magnificent seven and while it’s “actively managed” to the extent that it doesn’t track an index, the ETF’s tinkering is limited to the quarterly rebalances at which its roster is reset to equal weighting of the seven components.
MAGS Has Been Marvelous
For advisors and investors are ETF buffs, MAGS has an interesting story. When it debuted in April 2023, it was known as the Roundhill BIG Tech ETF and traded under the ticker “BIGT.” Seven months later, Roundhill engaged in what amounted to marketing genius by changing the fund’s name to current form and altering the ticker to “MAGS.”
In terms of getting eyeballs on the ETF, that gambit worked because last month the issuer announced MAGS topped $1 billion in assets under management. A month later, MAGS had $1.48 billion in assets under management, meaning its AUM tally surged by 48% in just a month and that the ETF is flirting with $1.5 billion in assets under management after just 20 months on the market.
That’s impressive work for any ETF, let alone one hailing from an issuer that isn’t among the top five or so in terms of size. Arguably, the implication there is that MAGS’s success is in large part attributable to advisors and retail investors. Equal-weighting and quarterly resets bolster the case for this ETF.
“We believe this crucial feature, along with pure exposure to the Magnificent Seven, makes MAGS a viable option over market capitalization weighted, diluted alternatives focused on the top companies in well-known indexes,” notes Roundhill’s Thomas DiFazio.
MAGS Delivering
The magnificent seven stocks combine for approximately 43% of the weight of the weight of the cap-weighted Nasdaq 100 Index. Obviously, that’s a significant percentage in a small number of stocks, but it’s worked out well as that index is up 31.47% for the 12 months ending Dec. 13. No one is going to quibble with that performance.
Still, there’s a compelling case for the magnificent seven purity offered by MAGS because that ETF is up more than 73% over the past year. It’s possible the good times will continue to close out 2024 and into next year.
“The Roundhill Magnificent Seven ETF (MAGS) is exhibiting impressive upside momentum in a supportive technical position,” adds DiFazio. “We believe the Magnificent Seven have the potential to trend higher given the bullish tailwinds from the underlying constituents.”