A big concern for investors these days is that big tech stocks are getting too expensive. While there’s a lot of growth potential for stocks such as Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL) and others in the “Magnificent 7” it’s also undeniable that their valuations are getting fairly high and perhaps too expensive for many investors.
That makes investing in an exchange-traded fund (ETF) which mirrors the S&P 500 a bit riskier than it may normally be. An alternative for investors is to consider a new ETF from Defiance, which excludes the Magnificent 7. The Defiance Large Cap ex-Mag 7 ETF (NASDAQ:XMAG) has recently launched and it believes it offers a solution investors have been demanding for a while. Defiance ETFs’ CEO and CIO Sylvia Jablonski says that, “We have heard loud and clear from institutional investors and advisors that they’re increasingly concerned about their sizable exposure to the Mag 7.”
The ETF can be an ideal option for investors who want large-cap exposure but who want perhaps less risk as corrections could be around the corner for the highly valued Magnificent 7. The downside, however, is that investors who invest in this type of ETF may miss out on possible gains if those stocks continue to dominate the markets and be hot buys.
Without the Magnificent 7, there are 493 holdings in the ETF. It comes with a higher expense ratio of 0.35% than other funds which mirror the S&P 500. However, for investors who want a more unique way for investing in the market, the fee may be justifiable.
