Defiance Large Cap ex-Mag 7 ETF

XMAG

Valor de mercado US$ 197 mi

Nvidia (NVDA) showed the AI trade remains very much alive, says Sylvia Jablonski, along with how important everything that energizes AI really is. She talks about how memory and photonics "fuel the engine" to AI, pointing to several ETFs investors can use to add exposure to portfolios.

The Roundhill Magnificent Seven ETF (CBOE:MAGS) was designed to provide investors with clean, equal-weighted exposure to the seven mega-caps that drove the S&P 500 higher for most of the past three years.

An exchange-traded fund holding the S&P 500 minus those seven names is outperforming the Magnificent Seven group by nearly 17 percentage points this year.

In H1 2026, part of my 2026 framework was confirmed: AI‑driven productivity, industrial strength, and utilities' power‑demand tailwinds played out, while the Iran shock created the only major deviation from expectations. However, the macro backdrop is changing: Brent is back in contango, Warsh is firmly higher‑for‑longer, growth and labor remain resilient, and hyperscalers continue pushing toward trillion‑dollar cumulative AI capex.

Amid a historic surge in chip stocks and a continued malaise for software, investors have all but forgotten about the once stalwart Mag Seven group of stocks.

If you own an ETF tracking the S&P 500 or the Nasdaq-100, the Magnificent Seven are unavoidable.

The Defiance Large Cap ex-Mag 7 ETF (NASDAQ:XMAG) and the Roundhill Magnificent Seven ETF (NASDAQ:MAGS) are photographic negatives of one another.

XMAG has overtaken both RSP and the Mag-7 since May 2026, reversing the first four months of the year when the equal-weight index was leading the breadth rotation trade. Beneath the 2026 outperformance, XMAG's top holdings have shifted dramatically in just one month. Understanding which names are climbing is the first step to evaluating this ETF. In this article, I explore the central paradox of XMAG: an ETF engineered to reduce Mag-7 exposure whose outperformance may owe more to those same seven companies than its construction.

Passive index investing has a concentration problem. The seven largest technology companies now account for roughly 35% of the S&P 500, which means owning a standard index fund today is less “broad market” and more “bet heavily on a handful of AI-driven mega-caps.

Stripping the Magnificent 7 from the