Defiance Debuts ETF Excluding Mag-7 Stocks
New fund offers investors exposure to large-cap stocks while avoiding tech giants.
Defiance ETFs launched a new ETF on Tuesday that explicitly excludes the “Magnificent Seven” mega-cap technology companies that have dominated market returns.
The Defiance Large Cap Ex-Magnificent Seven ETF (XMAG) will track the BITA US 500 ex-Magnificent 7 Index, providing investors exposure to the largest U.S. publicly-traded companies while excluding Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla, according to the fund's prospectus.
The fund aims to offer investors a way to diversify away from the concentration risk posed by these technology giants, which have grown to represent an outsized portion of major market indexes, according to a Defiance ETFs press release announcing the fund.
The passively managed fund tracks an index that “aims to provide a comprehensive and balanced representation of the U.S. equity market by including the largest 500 publicly-traded equity securities, while specifically excluding the seven largest technology companies commonly referred to as the ‘Magnificent 7’,” the prospectus states.
Alternative Large-Cap Exposure
The fund will charge an expense ratio of 0.35%, with Tidal Investments, the fund’s advisor, covering all of the ETF’s expenses except for items like trading costs and extraordinary expenses, according to the prospectus.
To be eligible for inclusion in the fund’s underlying index, securities must be listed on the New York Stock Exchange or Nasdaq Stock Market and have a three-month average daily traded value of at least $1 million, the filing states. The index selects the top 500 securities by market capitalization from an eligible universe of the 700 largest stocks, excluding the Mag-7 companies.
The launch of XMAG comes as the Roundhill Magnificent Seven ETF (MAGS), which specifically targets these tech giants, has attracted investor interest.
According to etf.com data, MAGS has accumulated $779.62 million in assets under management since its April 2023 launch, with $684.47 million in inflows over the past year.
MAGS has delivered strong performance, with a total return of 63% over the past year, highlighting the dominance of these tech companies in market returns, according to etf.com data.
The fund’s success—boasting nearly $63.2 million in inflows over the past three months alone—underscores why some investors might seek the diversification XMAG offers as a counterweight to this concentration.