The structural trend that dominated Wall Street for the better part of three years is showing signs of a significant regime shift.
The Roundhill Magnificent Seven ETF (NASDAQ:MAGS), which provides concentrated exposure to the tech giants driving the artificial intelligence revolution, has seen its momentum stall in early 2026. In comparison, the broader market begins to outperform.
493 of the 500 stocks in the S&P 500 are outperforming the Magnificent Seven so far in 2026. Two exchange-traded funds are capturing this divergence in real time.
Scorecard So Far
As of Thursday, the Roundhill Magnificent Seven ETF (NYSE:MAGS) is down 5.60% year-to-date, while Defiance Large Cap ex-Mag 7 ETF (NASDAQ:XMAG) — the ETF offering S&P 500 exposure with the Magnificent Seven removed — is up 3.23% over the same period. That’s a nearly 9-percentage-point gap.
MAGS, which holds equal-weight positions in NVIDIA Corp. (NASDAQ:NVDA), Meta Platforms Inc. (NASDAQ:META), Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Tesla Inc. (NASDAQ:TSLA), Amazon.com Inc. (NASDAQ:AMZN) and Microsoft Corp. (NASDAQ:MSFT), carries $3.50 billion in assets under management.
What Is XMAG And Why Does it Exist?
XMAG, listed on NASDAQ and launched on Oct. 21, 2024, tracks the BITA US 500 ex Magnificent 7 Index .It is a benchmark that includes the 500 largest U.S. publicly traded securities while explicitly excluding the seven mega-cap tech names.
The index uses free-float market capitalization weighting and rebalances quarterly. As of Thursday, the fund holds 493 stocks and carries net assets of $137.79 million.
‘Great Valuation Rotation’ Thesis
The divergence between XMAG and MAGS tracks closely with what veteran investor Ed Yardeni of Yardeni Research is calling the “Great Valuation Rotation of the Roaring 2020s.”
In a note to clients this week, Yardeni said the global rebalancing trade that began late last year is likely to extend well into 2026.
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