Do Mag 7 have too much influence over the S&P 500?
In recent years, the so called “Magnificent 7” (Mag 7) have had an impressive run.
The group collectively returned 271.13% over the 5 year period through to 2023, compared to the broader S&P 500 Index which returned 90.27%
This strong performance has culminated in the Mag 7 taking a far greater share of the market-cap weighted S&P 500, now accounting for around a third of the index.
When these Mag 7 stocks perform well, an investor may feel no reason to worry. But what we are seeing here is intense overconcentration. Just as the Mag 7’s disproportionate influence over the S&P 500 can drive returns, so too can it drive losses.
Read our full article where we examine how the Mag 7 are dominating market-cap weighted indices, and why an equal weighted approach may be a more balanced long-term solution.
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