Published on 30 May 2024 on Zacks via Yahoo Finance
Hedge Fund's "Mag 7" Exposure Hits a Record: ETFs to Tap
The "Magnificent 7" — Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), Nvidia (NVDA), Tesla (TSLA) and Meta Platforms (META) — have been driving the market rally this year on artificial intelligence (AI) craze.Buoyed by the AI boom and NVIDIA’s blockbuster earnings, hedge funds raised their exposure to U.S. technology behemoths to a record high. According to the latest report from Goldman Sach’s prime brokerage, Magnificent 7 companies account for about 20.7% of hedge funds’ total U.S. single stock net exposure. This represents the highest level on the record and exceeds the previous peak level of 20% seen last summer.NVIDIA alone has added about $470 billion in market capitalization since it released results on May 22 (read: Can NVIDIA's AI Chip Dominance Continue?).Further, the Magnificent 7 hit 31% weighting in the S&P 500.
ETFs to Tap
Investors seeking to tap the hedge fund’s activity could consider ETFs having the largest exposure to Magnificent 7.Roundhill Magnificent Seven ETF (MAGS)Roundhill Magnificent Seven ETF is the first-ever ETF offering investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $330.1 million in its asset base and charges 29 bps in fees per year. MAGS trades in average daily volume of 199,000 shares (read: ETFs to Tap as Investors Turn 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 next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of these seven stocks. MicroSectors FANG+ ETN has accumulated $276.1 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 142,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).Vanguard Mega Cap Growth ETF (MGK)Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 79 securities in its basket, with the Magnificent Seven collectively accounting for 57.7% of the total assets. Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 282,000 shares a day on average. The fund has AUM of $19.8 billion and a Zacks ETF Rank #2 (Buy).Invesco S&P 500 Top 50 ETF (XLG)Invesco S&P 500 Top 50 ETF follows the S&P 500 Top 50 ETF Index, which measures the cap-weighted performance of the largest companies on the S&P 500 Index, reflecting the performance of the U.S. mega-cap stocks. It holds 54 stocks in its basket and Magnificent Seven accounts for a combined 53.2% share. Invesco S&P 500 Top 50 ETF has been able to manage assets worth $4.4 billion but trades in a good volume of about 1.2 million shares a day on average. XLG charges 20 bps in annual fees and has a Zacks ETF Rank #3 (read: ETFs to Bet on Analysts' Bullish Forecast for S&P 500).iShares S&P 100 ETF (OEF)iShares S&P 100 ETF offers exposure to the 101 largest U.S. companies. Magnificent Seven accounts for a combined 45.2% share. iShares S&P 100 ETF has amassed $12.3 billion in its asset base and charges 20 bps in annual fees. It trades in an average daily volume of 194,000 shares and has a Zacks ETF Rank #3.