The ‘Magnificent 47’ has produced returns of around 100% since 2022
The much-celebrated ‘Magnificent 7’, comprised of the S&P 500’s seven most prolific tech stocks, has been outperformed by a European bank stocks index in recent years, Bloomberg data suggests.
Since 2022, the ‘Magnificent 47’, a subset of 47 stocks from the wider Stoxx 600 Banks Index, has neared 100% in total returns, factoring in dividends and share price rises. By comparison, the Magnificent 7 – (Alphabet (GOOGL; GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA) – has managed about 90% during the same period.
According to Nicholas Megaw, investment writer at the Financial Times, the Magnificent 47’s success has gone under the radar among retail investors, despite being noted by analysts.
“I think the person on the street is less likely to have noticed because we’re starting from such a terribly low base,” he said during an episode of the Financial Times’ Daily News Briefing podcast on Monday.
“One of the reasons the Mag Seven got so famous is that they’re so big. It was moving the entire global stock market. European banks are just much smaller than that, so they have less of a wider knock-on impact.”
The Magnificent 47 tracks Europe’s largest listed banks, including the likes of HSBC and Banco Santander, which have soared around 67% and 80% respectively since February 2022. While all of the Magnificant 7 stocks have achieved significant growth during this period, many have failed to reach these heights. Amazon, for instance, grew 45%, while Microsoft grew 33%.
Mag 7 still the safer long-term bet?
But the 2022-2025 period appears to be an important factor in this comparison, with 2022’s interest rate rises proving equally opportune for bank stocks and inopportune for tech stocks. If the measurement is taken from 2015, for instance, the banks’ returns remain at around 100%, while the Magnificent 7 soars to 2,600%.
Taking this into account, Megaw argued that he “would be really shocked” if the Stoxx 600 maintained the “blistering pace” it has shown in recent years.
However, while analyst forecasts suggest that common equity across the Stoxx 600 will dip from 12% to 11.4% in 2025, that is still close to double what it has achieved for the majority of the past decade.
Megaw also went on to argue that, comparisons aside, the recent success of the Magnificent 47 serves as a reminder for investors to explore beyond the “real mega-cap companies”.
“I don’t think banks will ever be quite as exciting as the big tech groups. But it is still a reminder that there is more than one game in town.”
