ETF choices offer different levels of Magnificent Seven exposure
Zacks compared five funds by their reported holdings in the seven stocks, while flagging heavy AI spending and concentration risks.
Key takeaways
- Zacks said SPY had about 35% of its assets in the Magnificent Seven.
- The five ETFs listed have reported Magnificent Seven exposure ranging from about 35% to nearly 60%.
- Zacks projected Magnificent Seven capital spending above $700 billion in 2026.
The five ETFs highlighted by Zacks offer varying exposure to the Magnificent Seven, a group of seven large technology stocks. The article said the SPDR S&P 500 ETF Trust (SPY) had about 35% of its assets invested in the group.
The funds range from a pure-play option to broader large-company portfolios. Zacks said the Magnificent Seven ETF (MAGS) focuses solely on the group and charges a 30 bps fee. Vanguard Mega Cap Growth ETF (MGK) had close to 60% of its assets in the stocks, with a 5 bps fee.
Invesco S&P 500 Top 50 ETF (XLG) held 55 stocks, with the group making up about 50% of its assets, and charged 20 bps. The iShares S&P 100 ETF (OEF) had a combined 42% allocation and a 20 bps fee, while Invesco QQQ (QQQ) had about 35% exposure and charged 18 bps, according to Zacks.
Zacks projected that the seven companies would spend more than $700 billion on capital expenditures in 2026, largely on AI chips, data centers and networking. The article also noted risks from regulation and the possibility that AI investments may not deliver expected returns.
The source said rising AI spending was weakening the group’s free-cash-flow advantage. It reported that Alphabet, Amazon and Tesla had negative free cash flow in the period discussed, while Apple and NVIDIA remained positive.
This article was produced with the help of AI technology. Source: Yahoo Finance
