XMAG has returned 16% YTD versus MAGS’s 5%, with Tesla’s 27% decline dragging down the equal-weighted Magazine 7 basket.
MAGS holds solely 34% of web property in precise equities, with 53% parked in Treasury payments and the remaining in swap derivatives.
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The Roundhill Magnificent Seven ETF (CBOE:MAGS) was designed to supply buyers with clear, equal-weighted publicity to the seven mega-caps that drove the S&P 500 greater for many of the previous three years. Since its April 11, 2023 launch, MAGS has executed precisely that, returning 190.29% via August 7, 2026.
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Holders purchased it for that publicity, and it delivered. 2026 has been a distinct story. MAGS is up 4.82% year-to-date, trailing the S&P 500 and getting outrun by a fund constructed to be its reverse: the Defiance Giant Cap ex-Magazine 7 ETF (NASDAQ:XMAG).
Why the Concentrated Wager Is Slipping
The efficiency hole this yr is extensive. XMAG has returned 15.95% YTD, whereas the SPDR S&P 500 ETF has returned 13.39%. MAGS trails each. The explanation sits contained in the fund’s personal holdings. Tesla, one of many seven equal-weighted names, is down 26.94% YTD. Microsoft is up simply 3.85%. When a basket owns every title at roughly the identical weight, a single laggard the scale of Tesla drags on the entire automobile.
Structurally, MAGS is uncommon for a fund that the majority buyers assume is a straight fairness basket. The March 31, 2026 NPORT submitting reveals the seven Magazine 7 fairness positions accounting for under 34.11% of web property. Treasury payments sit at 52.67%, a Roundhill ultra-short-duration ETF holds one other 8.97%, and web spinoff positions whole roughly $113.2 million.
The publicity is delivered via cash-collateralized swaps, which implies the fund’s returns rely upon each the underlying shares and the pricing of these swap contracts.
The BITA US 500 ex-Magnificent 7 Index is what XMAG tracks, with an expense ratio of 0.35% and roughly $175.40 million in property. The fund owns the remaining S&P 500 index shares outright. As of Could 31, 2026, the highest place is Broadcom at 4.78%, adopted by Micron at 2.51%, Eli Lilly at 2.16%, AMD at 1.93%, and JPMorgan Chase at 1.85%.
The fund retains semiconductor and AI-infrastructure publicity via the names that offer the Magazine 7, whereas including financials, healthcare, and vitality weights {that a} Magazine-7-only basket lacks.
Over the previous yr, XMAG has returned 24.37% versus 18.99% for MAGS. A holder of MAGS is making a single-factor guess on seven names. A holder of XMAG owns roughly 500 large-caps, excluding the seven most-owned shares on the earth, capturing the components of the index which have led in 2026 with out paying for people who haven’t.
Tradeoffs Price Naming
Tradeoffs include XMAG as properly. If the Magazine 7 resume their management function, XMAG will lag by design. The fund can also be smaller, with roughly $143 million in web property per its Could 31, 2026 NPORT submitting, in contrast with MAGS at $3.5 billion. That measurement distinction can matter for bid-ask spreads on bigger orders. For buyers who already personal a broad S&P 500 fund alongside MAGS, including XMAG serves to partially offset the concentrated guess quite than compounding it additional.
How one can Assume Concerning the Swap
The clear model of this commerce is a full swap inside a tax-advantaged account, the place promoting MAGS carries no capital features penalties. In a taxable account, the calculation will depend on the embedded acquire. A holder who purchased MAGS close to inception is sitting on a big acquire given the 190.29% return since April 2023, and a full sale may set off a significant tax invoice. A partial trim, redirecting new contributions to XMAG, or utilizing tax-loss heaps first are methods to shift the publicity with out a one-day tax occasion.
What This Leaves an Investor to Resolve
What it marketed is precisely what MAGS has executed. The related query now could be whether or not persevering with to focus on these seven names nonetheless aligns with the aim that initially drew the investor in. To this point in 2026, the broader half of the S&P 500 has been doing many of the work. XMAG is the automobile that isolates that individual commerce. Whether or not to reallocate will depend on how a lot of the portfolio already sits within the Magazine 7 via different index funds, and the way a lot conviction stays within the authentic thesis.
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