There’s nothing magnificent about the magnificent seven stocks in 2025. All but one (Meta) have suffered double-digit percentage declines, ranging from 10 per cent (Microsoft) to 37 per cent (Tesla).
That affects investors everywhere. At the end of 2024, the seven stocks accounted for a third of the S&P 500 and almost a quarter of the MSCI World index.
The latter contains some 1,400 stocks, but mega-cap dominance means it’s less diversified than investors might assume. Indeed, US stocks account for 73 per cent of the index.
An alternative for investors seeking greater global diversification is the MSCI World Equal-Weighted index, which weights all component stocks equally. Consequently, it’s less exposed to mega-caps, with technology accounting for just 11 per cent of the index.
The US, too, is less dominant, accounting for 38 per cent of the index.
Last September, Invesco launched Europe’s first ETF tracking the index. Domiciled in Ireland, it has slipped recently, but less steeply than its cap-weighted counterpart.
Equal-weighted ETFs have their own issues – for one, costs tend to be higher. Still, they have enjoyed strong inflows in recent months, attracting investors worried by concentration risk and eager to reduce reliance on a handful of pricey giants.
