Meet the Magnificent Seven Stocks
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What are the Magnificent Seven Stocks?
Love him or hate him, Jim Cramer has made his mark once again. In June 2023, Cramer helped to popularize the term "Magnificent Seven" to refer to the seven leading tech stocks, drawing inspiration from the iconic 1960 Western film, "The Magnificent Seven". Notably, he's the same financial pundit who first coined the term “FANG” stocks.
Regardless of your opinion of Cramer, it is hard to argue that Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla are anything other than Magnificent. Just like the seven men, each with their unique skills and backgrounds in the film attempt to save a village from a bandit, the Magnificent Seven stocks have saved the market this year, contributing more than 80% of the S&P 500’s total return. This is particularly remarkable given how bearish market participants were at the start of the year.
What Makes these Seven Stocks considered as the “Magnificent 7”?
The Magnificent Seven stocks are the stock market’s current leaders in driving technological innovation. These are mega cap companies with wide moats and more resilient business models when compared to smaller, less diversified counterparts. The Magnificent Seven companies operate across the globe with multiple product lines and continued investment in research and development, leading to innovations that can potentially power future growth. Lastly, their significant resources (i.e., strong net cash positions) allow them to establish and maintain competitive advantages, such as economies of scale, strong brand recognition and robust distribution networks.
Detailed look at the Magnificent Seven Tech Stocks:
- Alphabet: Alphabet dominates online search and advertising, influencing the digital landscape and information access globally.
- Amazon: Amazon reshaped retail on a global scale with its e-commerce dominance, along with cloud computing leadership with AWS.
- Apple: Apple revolutionized technology with iconic products, shaping consumer electronics and setting trends in design, software and user experience worldwide.
- Meta Platforms: Meta platforms are significant for social media reach, virtual reality, and its impact on online communication and digital advertising worldwide.
- Microsoft: Microsoft is vital for its software dominance, cloud computing (Azure), and widespread influence on personal and business technology worldwide, now also innovating in the field of artificial intelligence.
- Nvidia: NVIDIA is important for its pioneering role in graphics processing units (GPUs), crucial for AI, gaming, and high-performance computing applications.
- Tesla: Tesla has pioneered electric vehicle innovation, sustainable energy, and influenced the entire automotive industry's shift towards electrification.
How to Invest in Magnificent Seven Stocks:
While the Magnificent seven stocks can be found in countless ETFs, the Roundhill BIG Tech ETF (NASDAQ: BIGT) is the only ETF offering dedicated to the Magnificent 7 stocks. Equally weighted amongst the seven tech giants, BIGT is the only ETF to offer concentrated exposure to the Magnificent Seven. An equal-weighted approach takes the emotion out of it, as it forces one to sell high and buy low. Using an ETF for exposure eliminates friction and the ongoing management of desired exposure.
How Can BIGT Be Used to Invest in the Magnificent Seven Stocks?
We believe there are three primary use cases for BIGT – the Magnificent Seven ETF.
Long-term investing: BIGT allows long-term investors to express a very specific and targeted point of view on the Magnificent Seven stocks, which cannot be expressed via more diversified funds that have dilutive exposure to other securities.
Tactical trading: Since BIGT is composed of highly liquid underlying equities, it may be optimal for trading around various events, such as macro events, industry-level headlines, or company earnings.
Hedging: Due to its concentrated nature, BIGT may be optimal for hedging single-security risk within the Magnificent Seven group of stocks.
Learn more about you can invest in Magnificent Seven Stocks with BIGT.
Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about Roundhill ETFs please call 1-855-561-5728 or visit the website at www.roundhillinvestments.com/etf/. Read the prospectus or summary prospectus carefully before investing.
The Fund expects to have concentrated (i.e., invest more than 25% of its net assets) investment exposure in one or more of the Technology Industries at any given time, which may vary over time. Further, the Fund expects to obtain such investment exposure by transacting primarily with a limited number of financial intermediaries conducting business in the same industry or group of related industries. As a result, the Fund is more vulnerable to adverse market, economic, regulatory, political or other developments affecting those industries or groups of related industries than a fund that invests its assets in a more diversified manner. The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.
Roundhill Financial Inc. serves as the investment advisor. The Funds are distributed by Foreside Fund Services, LLC which is not affiliated with Roundhill Financial Inc., U.S. Bank, or any of their affiliates.