The Roundhill Magnificent Seven ETF (MAGS) offers investors focused exposure to seven of the most influential and innovative technology companies in the world, or in other words, the “Magnificent Seven.” The ETF, launched in April 2023, was initially named the Roundhill BIG Tech ETF. Then, on November 9, 2023, the Fund’s name changed to the Roundhill Magnificent Seven ETF.
The Roundhill Magnificent Seven ETF is designed to provide a simple and cost-effective way to invest in the “Magnificent Seven” – Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms, Nvidia, and Tesla.
These companies dominate their respective industries, leading advancements in artificial intelligence (AI), cloud computing, electric vehicles (EVs), and digital communication, making them critical drivers of the global economy and market performance.
As of end November, 2024, the Roundhill Magnificent Seven ETF’s total AUM is $1.04 billion.
The Roundhill Magnificent Seven Forecast
Bull Argument: Given the performance of the MAGS ETF and the Magnificent Seven stocks, it is clear that many investors have been and continue to be bullish on the names, given the tech giants possess dominant market positions, strong brand recognition, and robust financial performances. In a recent survey by Charles Schwab, it was revealed that 55% of respondents are optimistic about the Magnificent Seven.
Its not hard to see why as their continued investments in research and development fuel innovation, driving new products and services that capture market share. In addition, the rise of artificial intelligence has further strengthened their competitive advantage, while their substantial cash reserves, enable them to weather economic downturns and pursue strategic acquisitions.
Bear Argument: While not entirely bearish, Goldman Sachs’ chief U.S. equity strategist, David Kostin, projected an 11% rise in the S&P 500, forecasting the index to hit 6,500 by the end of 2025, in a recent note. However, he believes the Magnificent Seven stocks may taper off next year, explaining that while the bank expects it to outperform the S&P 500 by roughly 7 pp, it will be the slimmest margin in seven years.
Furthermore, a note from Scott Rubner, managing director for global markets at Goldman Sachs, recently explained that the Magnificent Seven stocks are increasingly out of favor among hedge funds. Rubner, citing data from the bank’s prime brokerage, noted that hedge-fund positioning in the stocks is at fresh one-year lows.
Elsewhere, In February 2024, a note titled “R.I.P the Magnificent Seven Era,” from Mike O’Rourke, chief market strategist at Jones Trading said the Magnificent Seven’s dominance over the stock market is coming to a close. O’Rourke was said to have invented the Magnificent Seven moniker. However, earlier this year, he stated: “This big rising tide of seven names lift[ing] all boats in the stock market, is what I see ending.” He added that he didn’t “see these seven names rising together.”
Our View: The Roundhill Magnificent Seven ETF provides targeted exposure to the tech sector’s most influential companies. However, the ETF’s concentrated nature makes it more volatile than diversified funds, and its reliance on a few large-cap stocks means performance is heavily influenced by those companies’ financial results.
Even so, investors who missed out on the stocks over the last year will have been disappointed. Looking ahead, investors bullish on the continued dominance of the Magnificent Seven and their ability to drive global technology trends will see MAGS as a compelling investment option. However, those seeking diversification or lower volatility may prefer broader tech ETFs like QQQ or VGT.
Roundhill Magnificent Seven ETF (MAGS) Performance
MAGS has delivered strong performance since its inception, reflecting the growth and market dominance of its underlying holdings.
| Year | Performance |
|---|---|
| 2024 YTD | +52.59% |
| 1-Year Return | +56% |
MAGS Holdings (end November 24, 2024)
MAGS is rebalanced to equal weight quarterly to maintain consistent exposure to the Magnificent Seven stocks in a single ticker.
| Company | Weight |
|---|---|
| Tesla | 18.48% |
| Nvidia | 16% |
| Alphabet (Class A) | 13.34% |
| Amazon | 13.33% |
| Apple | 13.30% |
| Meta Platforms | 12.98% |
| Microsoft | 12.60% |
Who Should Buy the MAGS ETF?
MAGS is a compelling option for many investors. However, it is important to make sure it aligns with your investing style. Here’s who might find MAGS appealing:
Firstly, those looking to capitalise on the long-term growth of market-leading tech companies will see the ETF as a solid opportunity, while investors bullish on the growth of artificial intelligence and electric vehicles, may also want to take a closer look at the ETF.
Of course, those who want targeted exposure to the top U.S. tech companies without managing individual positions will also find MAGS an appealing option. On the other hand, risk-averse investors who want to avoid potential volatility may prefer other ETFs, while income-focused investors may also want to look elsewhere as the ETF focuses on growth companies that typically reinvest profits rather than paying significant dividends.
