Magnificent 7 Hits 31% Weighting for S&P 500, Top 5 Holdings Hit 27% Weighting: Will Investors Look Elsewhere?
Portfolio Pulse from Chris Katje
The Magnificent 7 stocks, including Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, and Tesla, now make up 31% of the S&P 500 ETF Trust (SPY) and have significant weight in the Invesco QQQ Trust (QQQ). Nvidia's strong performance has driven its market cap close to Microsoft and Apple. The high concentration of these stocks in major ETFs raises concerns about potential volatility.
May 29, 2024 | 5:15 pm
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NEGATIVE IMPACT
Tesla is the outlier among the Magnificent 7 with negative returns, which could negatively impact ETFs with high Tesla weighting.
Tesla's negative returns make it an outlier among the Magnificent 7, potentially dragging down the performance of ETFs with significant Tesla weighting.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
NEUTRAL IMPACT
Apple is a major component of ETFs like SPY and QQQ, but its slight year-to-date decline could impact overall ETF performance.
Apple's significant weighting in major ETFs means its performance can impact the overall ETF returns. Its slight year-to-date decline is a concern.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
The Invesco QQQ Trust has an even higher concentration of Magnificent 7 stocks, which could lead to increased volatility.
The high concentration of Magnificent 7 stocks in QQQ means that any setbacks in these stocks could significantly impact the ETF's performance.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust has a high concentration of Magnificent 7 stocks, which could lead to increased volatility.
The high concentration of Magnificent 7 stocks in SPY means that any setbacks in these stocks could significantly impact the ETF's performance.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
POSITIVE IMPACT
Amazon's strong performance contributes to the high weighting of the Magnificent 7 in major ETFs, driving their returns.
Amazon's strong performance and significant weighting in ETFs like SPY and QQQ help drive their overall returns.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Alphabet's strong performance and significant weighting in major ETFs contribute to their overall returns.
Alphabet's strong performance and significant weighting in ETFs like SPY and QQQ help drive their overall returns.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Alphabet's strong performance and significant weighting in major ETFs contribute to their overall returns.
Alphabet's strong performance and significant weighting in ETFs like SPY and QQQ help drive their overall returns.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The Roundhill Magnificent Seven ETF offers concentrated exposure to the Magnificent 7 stocks, which could attract investors seeking targeted investments.
The Roundhill Magnificent Seven ETF provides targeted exposure to the Magnificent 7 stocks, which could appeal to investors looking for concentrated investments in these high-performing companies.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Meta Platforms' strong performance contributes to the high weighting of the Magnificent 7 in major ETFs, driving their returns.
Meta Platforms' strong performance and significant weighting in ETFs like SPY and QQQ help drive their overall returns.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
Microsoft remains a top holding in major ETFs, benefiting from the overall strong performance of the Magnificent 7 stocks.
Microsoft's position as a top holding in ETFs like SPY and QQQ means it benefits from the overall strong performance of the Magnificent 7 stocks.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Nvidia's strong Q1 results and surging stock price have significantly increased its weighting in major ETFs, making it a key driver of their performance.
Nvidia's strong financial performance and stock price surge have made it a significant component of major ETFs like SPY and QQQ, driving their overall performance.
CONFIDENCE 95
IMPORTANCE 90
RELEVANCE 100