Sanghamitra Saha
·3 min read
In the current investment landscape, the focus has shifted from the FANG stocks, and a new set of influential stocks, known as the Magnificent Seven Stocks, has emerged. These stocks include Alphabet GOOGL, Apple AAPL, Amazon AMZN, Meta Platforms META, Microsoft MSFT, Nvidia NVDA and Tesla TSLA. These companies are considered the new leaders in the stock market.
There is a pureplay ETF called Roundhill Magnificent Seven ETF MAGS on this theme. The ETF has surged more than 32% this year. There is another ETF called Invesco S&P 500 Top 50 ETF XLG, which invests about 50% of the basket in Magnificent Seven. That fund is up about 34% this year.
Individually, Apple, Alphabet and Microsoft are up more than 50% each, Meta shares are up about 165%, Amazon has gained 70%, Nvidia has skyrocketed about 233% and Tesla is up nearly 118% this year (as of Dec 12, 2023).
But there are a few tech ETFs that have beaten even the Magnificent Seven ETF MAGS. These include
Inside the Dominance of Magnificent Seven
The Magnificent Seven stocks have a significant impact on the Nasdaq index, as they collectively account for a major portion of its total weighting. Despite recent fluctuations in the market, some of the Magnificent Seven Stocks, including Apple, Microsoft, Amazon, Google, Nvidia, and Meta, continue to exert a substantial impact on the tech-heavy Nasdaq index mainly due to their meaningful positions in the Artificial Intelligence (AI) space. The AI boom made them stars in 2023.
What About Other Tech Jewels?
Even in the narrow market breadth in 2023, some other tech ETFs that are not solely focused on “Magnificent Seven” shined. With the Fed expected to cut rates by 75 bps in 2024, overall tech space should do well as the area thrives better in a low-rate environment.
Already, market breadth has continued to broaden, and smaller tech companies are likely to excel. Plus, the AI boom is ongoing, which is expected to push the space to another height next year.
ETF Picks
Below, we highlight those winning tech ETFs that trumped even Magnificent Seven in 2023.
VanEck Digital Transformation ETF (DAPP) – Up 192.3%
The underlying MVIS Global Digital Assets Equity Index is a rules-based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of the global digital asset segment. Along with DAPP, several other digital asset ETFs, bitcoin mining ETFs and blockchain ETFs have exceled and beaten MAGS this year by a wide margin (read: Block (SQ) Soars on Upbeat Earnings & Outlook: ETFs to Gain).
VanEck Semiconductor ETF (SMH) – Up 63.9%
The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. Along with SMH, other semiconductor ETFs also soared this year (read: Semiconductors Lead Decade's Top Gainers: 3 ETFs Up At Least 550%).
SPDR NYSE Technology ETF (XNTK) – Up 63.9%
The underlying NYSE Technology Index is composed of 35 leading U.S.-listed technology-related companies. The fund includes semiconductors (25.85%), Systems Software (12.33%), Application Software (9.82%), Interactive Media & Services (7.88%), Internet Services & Infrastructure (6%) and so on.
iShares U.S. Technology ETF (IYW) – Up 60.4%
The underlying Russell 1000 Technology RIC 22.5/45 Capped Index includes companies in the following sectors: software and computer services and technology hardware and equipment. The Index is capitalization-weighted and includes only companies in the technology industry of the Dow Jones U.S. Total Market Index (read: Buffett's Favorite 4 Sectors: ETFs in Focus).
WisdomTree Cybersecurity Fund (WCBR) – Up 59.1%
The underlying WisdomTree Team8 Cybersecurity Index is designed to track the performance of companies primarily involved in providing cyber security-oriented products. The fund charges 45 bps in fees (read: Here's Why Cybersecurity ETFs Are At a 52-Week High).
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
iShares U.S. Technology ETF (IYW): ETF Research Reports
Invesco S&P 500 Top 50 ETF (XLG): ETF Research Reports
SPDR NYSE Technology ETF (XNTK): ETF Research Reports
Roundhill Magnificent Seven ETF (MAGS): ETF Research Reports
WisdomTree Cybersecurity Fund (WCBR): ETF Research Reports
VanEck Digital Transformation ETF (DAPP): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
