Broadcom’s 140% Surge Shows XMAG Investors Get AI Exposure Without the Mag 7 Trap

Passive scale investing has a attraction problem. The 7 largest exertion companies present relationship for astir 35% of the S&P 500, which means owning a modular scale money contiguous is little "broad market" and much "bet heavy connected a fistful of AI-driven mega-caps." That world is precisely what Defiance Large Cap ex-Mag 7 ETF (NASDAQ:XMAG) was designed to address.

The illustration displays the full instrumentality examination betwixt the S&P 500 Total Return scale and 3 salient S&P 500 ETFs, illustrating wide marketplace show and diversification from 2015 to November 2024.

XMAG tracks the BITA US 500 ex-Magnificent 7 Index, which holds the 500 largest U.S. stocks weighted by free-float marketplace cap, with 1 hard rule: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla are permanently excluded. What remains is astir 493 companies that person spent years successful the shadiness of those 7 names.

The money launched successful October 2024 and carries a 0.35% disbursal ratio. Its apical holdings arsenic of aboriginal 2026 see Broadcom, Eli Lilly, JPMorgan Chase, and Berkshire Hathaway, with the apical 25 positions representing 31% of the fund. The assemblage premix tilts toward financials and non-Mag 7 technology, giving it a much value-oriented quality than a modular S&P 500 fund.

The instrumentality motor is simple: XMAG earns immoderate the different 493 companies gain done concern maturation and dividends. There are nary options overlays, nary leverage, and nary synthetic structures. It is simply a straightforward equity money with a deliberate exclusion list.

XMAG has delivered a 28% one-year return, compared to 35% for the SPDR S&P 500 ETF implicit the aforesaid period. That astir 6.5-point spread reflects the outgo of excluding immoderate of the market's strongest performers. Nvidia unsocial roseate 99% implicit the past year, and Apple gained 38%. Missing those moves has a existent price.

READ: The expert who called NVIDIA successful 2010 just named his apical 10 AI stocks

But the year-to-date representation successful 2026 flips that narrative. XMAG is up 5% year-to-date, portion SPY has gained lone 4%. Microsoft is really down 12% year-to-date, illustrating that Mag 7 attraction cuts some ways. When these names compress, SPY compresses with them.

Broadcom is worthy flagging here. It is XMAG's largest holding and has returned 140% implicit the past year, with AI spot gross increasing 106% year-over-year to $8.4 billion. XMAG excludes the Mag 7 specifically, not AI vulnerability broadly. Investors who privation to enactment successful the AI buildout without concentrating successful the 7 astir crowded names inactive get meaningful vulnerability done holdings similar Broadcom.