The Roundhill Magnificent Seven ETF, which tracks seven mega-cap stocks through equal weighting, has underperformed the broader market during the current year. MAGS returned 4.82% year-to-date through August 7, lagging behind the S&P 500’s 13.39% return and significantly trailing the Defiance Large Cap ex-Mag 7 ETF, which posted a 15.95% year-to-date gain.
The performance drag on MAGS stems primarily from Tesla, which declined 26.94% year-to-date. Because the fund weights each of its seven holdings roughly equally, a single significant underperformer substantially impacts overall returns. Microsoft, another major holding, gained only 3.85%, further constraining the fund’s performance. Since launching on April 11, 2023, MAGS had returned 190.29% through the measurement date, but 2026 has presented a different dynamic as leadership rotated away from mega-cap technology stocks.
Structurally, MAGS employs an unconventional approach for an equity-focused fund. According to a March 31, 2026 filing, only 34.11% of the fund’s net assets consist of the seven Magnificent Seven equity positions themselves. Treasury bills comprise 52.67% of holdings, with additional exposure to a Roundhill ultra-short-duration ETF at 8.97% and net derivative positions around $113.2 million. The fund delivers stock exposure through cash-collateralized swaps rather than direct ownership of all positions.
In contrast, XMAG owns roughly 500 large-cap stocks from the S&P 500 while excluding the Magnificent Seven names. This structure has captured broader market strength this year, with top holdings including Broadcom, Micron, Eli Lilly, AMD, and JPMorgan Chase. Over the past year, XMAG returned 24.37% compared with 18.99% for MAGS. However, investors considering a shift between funds must weigh tax consequences, fund size differences affecting trading spreads, and the possibility that Magnificent Seven stocks may resume leadership in future periods.
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