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What are we looking for?

Mutual funds and ETFs that have placed active bets on the Magnificent 7

The screen

At present the Magnificent 7 (consisting of Microsoft MSFT-Q, Apple AAPL-Q, Amazon AMZN-Q, Nvidia NVDA-Q, Google GOOGL-Q, Meta META-Q and Tesla TSLA-Q stocks) make up about 30 per cent of the S&P 500 index according to Morningstar’s data. At this point, passive investors are likely still rejoicing given their stellar performance driving up returns of market cap weighted indices, despite the recent troubling news surrounding Tesla, and other concerns. With increasingly sky-high valuations, some might ponder whether there is further to go, or if the arrival of generative AI might further bolster revenue lines for these companies. All this said, several active fund managers seem to have conviction in the Mag 7. Today we shine a light on these products that are available for sale in Canada.

To find these funds, I used Morningstar Direct’s Analytics lab to look for actively managed Canadian-domiciled mutual funds and ETFs that have exposure to all seven companies. The list was large. Of the 4,400 or so unique investment strategies available to Canadians, about 900 had some level of exposure to the Mag 7. I took this list and further sorted by funds that have greater than 30 per cent exposure, signalling that they are on aggregate overweight in the seven names relative to the S&P 500 (noting importantly that not all fund on the list benchmark against this index).

The analysis looked only to the oldest share class of each fund and excluded share classes that are sold exclusively to institutional investors.

Funds that are overweight in the Magnificent Seven

NameMorningstar Category% of Portfolio held in Magnificent 7Portfolio DateTickerMER (%)Morningstar Rating for FundsMorningstar Medalist RatingMorningstar Medalist Rating DateTotal Ret YTD (%)Total Ret 1 Yr (%)Total Ret Annlzd 3 Yr (%)Total Ret Annlzd 5 Yr (%)Total Ret Annlzd 10 Yr (%)Total Ret Annlzd 15 Yr (%)Inception DateAvg. Manager Tenure (Years)Longest Manager Tenure (Years)
Global ImanGlobal Equity59.82024-03-312.785 StarsSilver2/29/202416.832.110.514.412.93/6/20098.115.1
Hamilton Technology Yield Maximizer ETFSector Equity51.82024-01-31QMAX-T0.7812.310/25/2023
IG Putnam US Growth AUS Equity51.82024-01-312.624 StarsNegative2/29/202414.240.310.615.316.211/28/20115.06.3
Mackenzie US All Cap Growth AUS Equity44.22024-01-312.544 StarsNegative11/15/202314.240.410.214.915.914.61/27/19955.86.7
Franklin Innovation FGlobal Equity39.02024-02-290.921 StarsNeutral2/29/202416.943.54.51/22/20213.33.3
BMO Multi-Factor Equity FUS Equity38.22024-03-310.774 StarsNeutral2/29/202412.630.612.914.25/14/20185.95.9
Franklin US Opportunities AUS Equity35.82024-02-292.102 StarsNegative3/15/202415.842.15.311.412.512.44/14/19977.97.9
AGF Systematic US Equity ETFUS Equity34.22024-02-29QUS0.453 StarsNeutral2/29/202411.426.09.711.61/30/20175.37.3
NBI SmartData US Equity AdvUS Equity33.82024-02-292.123 StarsNeutral2/29/202412.828.811.112.411.013.211/1/20078.88.8
BMO US Equity AUS Equity33.72024-03-312.493 StarsNegative2/29/202412.427.610.710.811.612.21/7/19976.610.9
Hamilton U.S. Equity Yield Maximizer ETFUS Equity32.12024-02-29SMAX-T0.7811.810/25/2023
NBI Innovators Fund AGlobal Equity31.62024-02-292.23Neutral2/29/202412.534.512.017.918.116.98/3/19951.41.4
Fidelity SmartHedge US Equity F5US Equity31.02024-02-290.96Bronze2/29/202410.221.91/25/20231.31.3

Source: Morningstar Direct Analytics Lab | Performance Data as of April 8, 2024

What we found

The funds that qualified in the screen are listed in the table accompanying this article alongside their categories, MERs, trailing performance, inception dates, and ratings. Also listed on the table is the average and longest manager tenures on the fund. Recall that the Morningstar rating for funds (a.k.a. “star rating” is an objective backward-looking assessment of a fund’s after-fee risk adjusted returns relative to peers, while the Medalist Rating is Morningstar’s assessment of funds’ ability to produce after-fee alpha in the future.

This article does not constitute financial advice, it is always recommended to conduct one’s own independent research before buying or selling any of the funds or ETFs mentioned in this article.

Ian Tam, CFA, is director of investment research for Morningstar Canada.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 4:00pm EDT.

SymbolName% changeLast
Microsoft Corp
Apple Inc
Nvidia Corp
Alphabet Cl A
Meta Platforms Inc
Tesla Inc

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