Markets post-Covid remain unpredictable, in our view making “precision investing” more desirable than ever for both traders and investors seeking reliable opportunities. Hoping to leverage the largest and most-liquid companies in the tech industry broadly, Roundhill Investments has created a new ETF. The Roundhill Magnificent Seven ETF (NASDAQ: MAGS) is the only ETF featuring precise and concentrated exposure to Magnificent Seven stocks—Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla.  

New responses

Magnificent Seven companies are currently leading a global drive toward innovation. All seven are mega-cap, multi-national firms with wide moats and resilient business models compared to their smaller, less-diversified counterparts. Given their multiple product lines and diversified revenue streams, some expect the Magnificent Seven ’s economic influence to power sustained growth. Likewise, significant resources like strong net-cash positions help these tech giants maintain a competitive advantage through economies of scale, brand recognition, robust distribution networks, and the ability to reinvest cash flow into R&D.

In an ETF context, a fund’s composition can make or break whether a portfolio is positioned for desired exposures. Adding to the anticipated long-term heft of these high-performing stocks, MAGS is designed to position investors on several connected levels:

• The fund offers the ability to trade seven stocks in a single ticker with options trading also available;
• The portfolio is equally weighted and rebalanced quarterly;
• Highly liquid like many ETFs, the fund features a tax- and cost-efficient structure at an attractive expense ratio of 0.29%.

Deploying tech

As an investment strategy, how does MAGS compare to other Magnificent Seven choices? Indexes such as the Nasdaq-100®¹ or S&P 500 may include these stocks, but they also include many other holdings and sectors, so for investors looking for pure tech exposure, it may be dilutive. The NYSE FANG+ Index² focuses on 10 tech stocks, yet creates other challenges by including brands, such as Snowflake that do not have market-leading size and scale. Finally, the Technology Select Sector Index³ offers exposure to IT components in the S&P 500.⁴ Yet, due to global classification standards, the index has zero exposure to four of the Magnificent Seven stocks.

MAGS also eliminates friction and ongoing exposure management through rebalancing to reduce single-stock risk. Further, the fund only owns Magnificent Seven stocks and does not water down exposure, while sector weighting is driven by constituent equities—not the other way around.

Precision matters

Investors can find Magnificent Seven stocks in countless ETFs. Yet as the only solution with dedicated exposure to Magnificent Seven, we believe the Roundhill Magnificent Seven ETF presents a unique investing opportunity not previously available. The fund’s concentrated nature delivers not only ease of use but long-term, undiluted options for specific points of view, along with the chance to make flexible, tactical trading decisions in response to defined events. Finally, due to its structured focus, the fund may prove optimal for hedging single-security risk among the Magnificent Seven stocks.

1. The NASDAQ-100 Index® is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ. No security can have more than a 24% weighting.

2. The NYSE FANG+ Index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies such as Facebook, Apple, Amazon, Netflix, and Alphabet's Google.

3. The Technology Select Sector Index is a modified cap-weighted index. The index is intended to track the movements of companies that are components of the S&P 500 and are involved in the development or production of technology products.'

3. The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the MAGS ETF please call 1-855-561-5728 or visit the website at https://www.roundhillinvestments.com/etf/MAGS. Read the prospectus or summary prospectus carefully before investing.

Click here for current fund holdings: https://www.roundhillinvestments.com/etf/mags/ 

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.

Foreside Fund Services, LLC: Distributor.

Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
 

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