Defiance ETFs has introduced a novel US large-cap equity ETF offering S&P 500 exposure while avoiding the dominant technology and technology-enabled stocks known as the “Magnificent Seven”.

The ETF provides reduced concentration exposure to US large-cap equities.

The Defiance Large Cap Ex-Magnificent Seven ETF (XMAG US) has been listed on Nasdaq with an expense ratio of 0.35%.

The fund is linked to the BITA US 500 ex Magnificent 7 Index which consists of all S&P 500 constituents, generally representing the largest 500 publicly traded securities in the US, while excluding Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.

Constituents are weighted based on free-float market capitalization and rebalanced quarterly.

The ETF’s exclusionary strategy is beneficial for those seeking broader diversification across large-cap stocks without overexposure to the Magnificent Seven. The largest constituents in the portfolio are Broadcom (2.3%), Eli Lilly (2.0%), JPMorgan (1.8%), Berkshire Hathaway (1.7%), and Exxon (1.5%).

By focusing on S&P 500 constituents outside of the Magnificent Seven, the fund provides a more balanced exposure across sectors, potentially reducing volatility linked to high-growth tech stocks. This approach may appeal to investors wary of the valuation pressures in technology-heavy portfolios, especially amid sector-specific economic or regulatory challenges.

Sylvia Jablonski, CEO and CIO of Defiance ETFs, commented: “We have heard loud and clear from institutional investors and advisors that they’re increasingly concerned about their sizable exposure to the Magnificent Seven. Even clients who believe that the Magnificent Seven will continue to grow have seen their portfolios become engulfed by these companies, and they’re looking for a solution.

“With XMAG, we’re providing the market with the broad-based, diversified exposure that investors have always sought with the S&P 500. In offering this in an ETF, we’re making the process of screening seven companies out of an index of 500 more efficient, and we’re excited to see the market’s reception to it.”