LemonTrades
TL;DR
- MAGS holds the “Magnificent Seven”: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla, about one-seventh each, rebalanced every quarter.
- It gets part of that exposure through swaps backed by Treasury bills, which is why T-bills show up as its biggest holdings.
- Its yearly fee is about 0.30%. It’s a concentrated bet: seven stocks in one industry.
- LemonTrades tells you what moved the big tech stocks, and why, as it happens, and warns you before their earnings.
MAGS launched in April 2023 to give an easy way to own the stocks driving most of the market’s gains.
How it works
- Equal weight: each stock is about 14% at each rebalance, so Tesla counts as much as Nvidia. In the S&P 500, Nvidia is about six times Tesla’s weight.
- Swaps: part of the exposure comes from swap contracts with banks, backed by Treasury bills.
- Dividend: a small yearly payout, mostly from the T-bill interest.
MAGS vs the alternatives
| MAGS | QQQ | VOO | |
|---|---|---|---|
| Stocks | 7 | About 100 | About 500 |
| Weighting | Equal | By company size | By company size |
| Yearly fee | About 0.30% | 0.20% | 0.03% |
| Risk | Highest | High | Market |
The risks
- Seven stocks, almost all tied to AI and tech spending. The November 5 sell-off hit all of them.
- Swaps add a small risk that a bank counterparty fails.
- Equal weighting means more Tesla than most index funds hold.
On the individual stocks: best stocks to invest in, NVDA stock prediction and Tesla stock prediction. A broader chip fund: SMH.
Sources
Education, not financial advice. All investing involves risk, including the loss of your money. See our disclaimer.
