By T.J. Kistner, CFA, CAIA, Chief Investment Officer at Retirement Plan Advisors, and Alex Gault, CFA, Investment Analyst at Retirement Plan Advisors
As a handful of tech stocks have come to dominate the S&P 500 and, more importantly, the Russell 1000 Growth Index, active U.S. growth equity managers operating under the Investment Company Act of 1940 are facing serious challenges with real-world implications for investors.
By now, most investors are familiar with the moniker “Magnificent Seven,” which refers to a collection of large, primarily tech-oriented companies whose stock prices have seen a meteoric rise over the last 18-24 months. Through September 30, 2024, Apple, Microsoft, NVIDIA, Tesla, Alphabet (Google), Amazon, and Meta (Facebook and Instagram) are collectively up almost 300% since the beginning of 2023. As their share prices have exploded, their overall size and representation within the U.S. stock market also has grown dramatically.