The investment trusts most exposed to the magnificent 7

As authoritative voices such as the Bank of England and the boss of JP Morgan warn of frothy valuations in some American stocks, private investors may want to consider their own exposure to companies such as the ‘magnificent seven’.

This is easy enough if you invest directly in individual shares but if you have your money in funds you may not appreciate exactly what you own.

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Analysts at Stifel, the stockbroker, recently identified the global investment trusts – funds listed on the London stock market – most exposed to the magnificent seven. They found that the JPMorgan Global Growth & Income trust had the highest exposure to the seven tech stocks at 28.9% of the portfolio.

The magnificent seven are Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia and Tesla.

The second most exposed trust was Monks, which had 20.4% of its money in the seven companies, Stifel said. Monks is run by Baillie Gifford and has some holdings in common with its larger and more famous stablemate Scottish Mortgage. The Bankers trust had 19.6% of its assets in the magnificent seven, while F&C had 15.6%, Scottish Mortgage 13.7%, Brunner 12.4%, Alliance Witan 11% and Scottish American 7.8%. The only global trust to lack any exposure to the stocks was Murray International.

The analysis did not cover technology trusts such as Allianz Technology and Polar Capital Technology but a look at the trusts’ recent factsheets shows that their mag 7 exposure among their top 10 holdings was 36.3% and 34.2% respectively. But these percentages were dwarfed by Manchester & London’s 64.5% exposure via just two magnificent seven stocks, Nvidia and Microsoft. JPMorgan American had 28.5% of its money in the five mag 7 stocks that featured in its top 10 holdings at the end of August.

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Among the nine global trusts covered by Stifel, Tesla was the least popular magnificent seven stock: just three of the funds held it, and their stake sizes were small at 1% (Scottish Mortgage), 0.9% (JPM Global G&I) and 0.7% (F&C). Microsoft was the most popular thanks to its inclusion in seven of the nine portfolios and stake sizes as large as 7.6% in the case of JPM Global G&I.

• Read: How does Scottish Mortgage stack up against its rivals?

Stifel also looked at how global trusts’ magnificent seven exposure had changed since the start of the year. The most striking change was a fall of 5 percentage points in Scottish Mortgage’s exposure since January. Much of this reduction was down to a cut in the trust’s stakes in Amazon and Tesla – from 7% to 4.7% and from 2.2% to 1% respectively. Alliance Witan cut its overall exposure to the mag seven by 2.5 percentage points over the course of the year but JPMorgan Global Growth & Income increased its exposure by 2.6 percentage points. Changes in the other global trusts’ exposures were less than 2 percentage points.

• Read: How can I invest in big US stocks but avoid Tesla?

Stifel said: ‘We are always wary of the consensus view and potential ‘bubbles’ and we think when the mag 7 does move out of favour, the shift could be dramatic, with clear implications for the relative performance of the global trusts.’

• Read: What investment trusts have investors bought so far this year?

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in these investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.