The extraordinary performance of equity markets in 2023 was unusually narrow, with the so-called Magnificent Seven stocks driving performance. As a result, the Magnificent Seven now account for around 30% of the MSCI USA Index at the end of 2023 and about 30% for the MSCI World Index 20%.

This now raises concerns about overvaluation and susceptibility to profit-taking. At the same time, owing to their concentration, a notable reversal in the performance of the Magnificent Seven would do major damage to anyone holding a market cap weighted US or global ETF.

Indeed, it is worth considering what happened in 2022. In 2022, the MSCI World lost just under -18%. Around 40% of the losses in the index were the result of the price declines from the Magnificent Seven. Meanwhile, the MSCI USA Index lost just under -20%, with the Magnificent Seven responsible for around half of that.
So, while the Magnificent Seven drove returns in investors favour in 2023, in the prior year it drove major losses.

In 2024, we expect investor interest in equal weighted indices to increase. Investors, we believe, wish to diversify away from the extreme concentration now found in market cap weighted indices.

This would decrease the concentration risks, but also provide exposure to smaller cap sections of the market. HANetf has several equally weighted ETFs. For broad tech exposure, HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) is potentially one to consider. The ETF’s dual equal weighting, among eight tech subthemes, provides greater exposure to small and midcap tech names.

Equal weighting’s significance extends beyond broad indices, particularly in emerging sectors or themes. Equal weighting allows for increased exposure to small, emerging players and ensures that large companies with multiple revenue streams don’t dominate due to their market caps.

HAN-GINS Cloud Technology Equal Weight UCITS ETF (SKYY) provides equal-weighted exposure to 100 stocks across three sub themes: Infrastructure as a service (IaaS), Platform as a service (PaaS) and Software as a Service (SaaS).

Explore that HAN-GINS Equal weighted technology ETFs below:

Tech Megatrend Equal Weight UCITS ETF (ITEK)
Provides equal weighted exposure to disruptive technology companies in “Industry 4.0” beyond the FAANGS, across eight sub-themes

Cloud Technology Equal Weight UCITS ETF (SKYY)
Seeks to provide equal weighted access to companies with significant exposure to cloud computing technology.


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