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Daily Updates | ETFs Highly Exposed to the ‘Magnificent 7’ Have Been Pummeled Amid a Tech Selloff

ETFs Highly Exposed to the ‘Magnificent 7’ Have Been Pummeled Amid a Tech Selloff

ETFs Highly Exposed to the Magnificent 7

ETFs (Exchange-traded Funds) have seen a dip in the last week amid volatility in the tech stocks. Especially, the ETFs having major investments in the "Magnificent 7" have seen a major dip.

"Magnificent 7" has the list of 7 mega tech stocks, which includes Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META), Google parent Alphabet (GOOGL), Tesla (TSLA), and Nvidia (NVDA). This Magnificent 7 has seen major hits this week amidst the lower-than-expected earnings and soaring Treasury Yields.

The list of the most impacted ETFs includes some of the most popular and trusted ETFs like the Invesco QQQ Trust (QQQ). This ETF invests around 40% of its assets in the Magnificent 7, and as a result, it is down by more than 6% since 17th October. It all started after Tesla announced their earnings report and became the first company of the magnificent 7 to do so.

Next comes the Vanguard Information Technology ETF (VGT). It is one of the biggest ETFs focused on tech stocks, holding more than 45% in Apple, Microsoft, and Nvidia. VFT has more than 45% of its total $50 billion investment portfolio in these companies, which eventually has fallen close to 6% since last Tuesday. 

Vanguard Mega Cap Growth ETF (MGK) is perhaps the ETF with the most percentage holding in the Magnificent 7 of its total investment portfolio. These seven tech companies account for around 57% of the total portfolio of MGK ETF. It has also fallen around 6% since 17th October.

Although MGK is the most invested ETF in Magnificent 7, it's interesting that it doesn't have the steepest drawdowns. The one with the Steepest drawdowns is VanEck (SMH) and iShares Semiconductor ETFs (SOXX), as they are heavily invested in Nvidia and other chip makers companies, which have shed 7% and 8% of their values. The reason is that the chipmaker companies have recorded the steepest monthly losses in the tech stocks.

How Much Does Individual Tech Stock Sink?

Tesla stock has shown the steepest decline, 19% of its original value since Tuesday, after it released its third-quarter earnings on 18th October.  

After Tesla, Google was the second worst performer in the Magnificent Seven list. Google's stock price has shed 12% after missing expectations in the latest quarter's earnings release. It pushed the investors to sell their stocks, resulting in falling share prices.

Meanwhile, the share price of Nvidia and Meta platforms has fallen 8% since Tuesday. On the other hand, Apple's share price is down by 5%. Amazon and Microsoft are down by 3% and 1%. They were the least affected stocks in the list of top 7 tech stock companies, as their cloud revenue sources performed really well in the last quarter.

Together, the recent sell-offs in the tech giants have dragged down the major stock market averages, as they share a sizable share in the US equity market. From last Tuesday, The S&P 500 is down by 6%, while on the other hand, the Nasdaq Composite Index has fallen almost 7%.