MAG 7 – Risk or Opportunity?

Last week, I gave a talk titled “Magnificent 7: Risk or Opportunity?” and had some fascinating discussions afterward at our Gutmann office in Budapest.

The MAG 7 refers to the largest publicly traded companies in the U.S. – the Magnificent 7: Alphabet (Google), Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. Their immense market capitalization has given them a historically high share of the overall market. And that, of course, sparks debate.

During my presentation, I realized something: I hadn’t actually answered the question in the invitation. Is their dominant market share a risk or an opportunity? I believe every question deserves an answer, and mine is: We don’t need to know. Our investment approach does not require us to get caught up in this debate.

Are we missing out?

Our equity strategy is broadly diversified – across various themes, sectors, and regions. Our equity positions span the U.S., Europe, and Japan. We hold five of the MAG 7 stocks, with a total weighting of around 7%. So, the real question isn’t whether these 7% represent a risk or an opportunity in themselves. Rather, it’s: Are we missing out by not weighting these dominant companies as heavily as the major stock indices do?

Our answer: No. Because large concentrations carry high risks. That’s why we take a broader approach – not just within the technology sector. Companies in healthcare or consumer goods are just as exciting and promising.

And when some of the big tech stocks came under pressure in recent weeks? Suddenly, solid dividend payers were in demand again. The result? New all-time highs for the Gutmann equity strategy! Yes, I know – past performance is no reliable indicator of future results (hello there, disclaimer). But our disciplined and balanced approach creates opportunities – and, hopefully, helps you sleep soundly at night.