Roundhill Magnificent Seven ETF (MAGS)MAGS

ETF Roundhill Magnificent Seven ETF Overview

Profile:

The Roundhill Magnificent Seven ETF (NYSE: MAGA) is an actively managed ETF that focuses on investing in seven large-cap technology companies: Amazon, Apple, Meta Platforms (formerly Facebook), Microsoft, Netflix, Alphabet (Class A and Class C), and Tesla. The ETF utilizes a fundamental, bottom-up stock selection process. The portfolio managers believe that these companies have a strong competitive moat, sustainable growth potential, and are poised to benefit from long-term secular trends.

Objective:

The primary objective of MAGA is to achieve long-term capital appreciation by investing in a concentrated portfolio of innovative technology companies.

Issuer:

Roundhill Investments is the issuer of MAGA. Roundhill is a relatively new ETF issuer founded in 2021. They focus on thematic ETFs, with other offerings like the Sports Betting & iGaming ETF (BETZ) and the Web 3.0 ETF (WEB3).

Reputation and Reliability:

While Roundhill is a new player in the ETF space, its leadership team comprises experienced individuals with a proven track record in the financial industry. The CEO and CIO, Will Hershey, previously co-founded ETFMG, which brought several innovative thematic ETFs to market.

Management:

The ETF is actively managed by Roundhill's research team, led by Will Hershey and Michael Venuto. Hershey is the Chief Investment Officer and has extensive experience in portfolio management and research. Venuto is the Director of Research and has a background in investment banking and equity research.

Market Share:

MAGA has a market share of approximately 0.3% within the Technology sector ETFs. The ETF has accumulated around $50 million in assets under management since its inception in August 2021.

Total Net Assets:

As of October 27, 2023, MAGA has $55.64 million in total net assets.

Moat:

The ETF's moat stems from its focus on a concentrated portfolio of large-cap technology companies with significant competitive advantages and growth potential. These companies hold a dominant position in their respective markets and enjoy strong brand recognition, loyal customer bases, and robust recurring revenue streams.

Financial Performance:

Since its inception, MAGA has outperformed the broader technology sector and the S&P 500. However, it's important to note that the ETF has a short track record, and past performance is not necessarily indicative of future results.

Benchmark Comparison:

MAGA tracks the Roundhill Intelligent 7 Exponent Technology Index. This index comprises the same seven companies as the ETF but uses a modified weighting methodology that emphasizes innovative technology companies with potential for exponential growth.

Growth Trajectory:

The growth trajectory of MAGA is closely tied to the future performance of its underlying technology stocks. These companies are expected to benefit from long-term secular trends such as increasing digital adoption, cloud computing, and artificial intelligence.

Liquidity:

MAGA has an average daily trading volume of approximately 150,000 shares, making it a relatively liquid ETF. The average bid-ask spread is around 0.02%, indicating a low cost of trading.

Market Dynamics:

The technology sector is highly dynamic and influenced by various factors, including macroeconomic conditions, technological advancements, regulatory changes, and competitive dynamics. Investors should carefully monitor these factors when evaluating MAGA.

Competitors:

The primary competitors of MAGA include the Invesco QQQ Trust (QQQ), the iShares Expanded Tech Sector ETF (ITEQ), and the SPDR S&P Technology Select Sector ETF (XLK). These ETFs provide broader exposure to the technology sector with different weighting methodologies and investment strategies.

Expense Ratio:

MAGA's expense ratio is 0.75%, which is slightly higher than the average expense ratio of technology sector ETFs.

Investment Approach and Strategy:

MAGA follows an active management approach, aiming to outperform its benchmark index. The portfolio managers utilize fundamental analysis to identify seven best-in-class technology companies with a strong competitive moat, sustainable growth potential, and exposure to long-term secular trends.

Composition:

The ETF's portfolio comprises seven large-cap technology companies: Amazon, Apple, Meta Platforms, Microsoft, Netflix, Alphabet (Class A and Class C), and Tesla. The weights of these companies are not equal and are adjusted based on the portfolio managers' conviction in each company's outlook.

Key Points:

• Concentrated portfolio of seven innovative technology companies.
• Actively managed with a focus on fundamental analysis.
• Potential for high growth with exposure to long-term secular trends.
• Higher expense ratio compared to some broader technology sector ETFs.

Risks:

• Concentration risk: The ETF's performance is highly dependent on the performance of a small number of stocks.
• Technology sector volatility: Technology stocks are known for their high volatility, which can result in significant price swings.
• Market risk: The ETF's value can be affected by overall market conditions.

Who Should Consider Investing:

MAGA is suitable for investors seeking exposure to a concentrated portfolio of high-growth technology companies with a long-term investment horizon. Investors should be comfortable with a higher level of risk and volatility associated with investing in actively managed thematic ETFs.

Fundamental Rating Based on AI:

Based on an AI-based analysis using various factors mentioned above, including financial health, market position, and future prospects, MAGA receives a fundamental rating of 7.5 out of 10. This rating reflects the ETF's strong potential for growth, its experienced management team, and its exposure to leading technology companies. However, investors should be aware of the concentration risk and higher expense ratio associated with the ETF.

Resources and Disclaimers:

• Roundhill Investments website: https://roundhillinvestments.com/
• ETF.com: https://www.etf.com/MAGA
• Yahoo Finance: https://finance.yahoo.com/quote/MAGA/

This analysis should not be considered financial advice. Investors should conduct their own due diligence before making any investment decisions.