With four of the magnificent seven tech stocks expected to report this week, all eyes are on the mega-cap AI cohort, but analysis from IG indicates these stocks have underperformed parts of the UK this year.<\/p>\n
According to research from trading platform IG, the magnificent seven cohort has lost money this year, shedding 1.2% in sterling terms based on Bloomberg data.<\/p>\n
Chris Beauchamp, chief market analyst at IG, said: \u201cNo investment theme works all the time.<\/p>\n
\u201cThe \u2018magnificent seven\u2019 moniker has felt out of date for a while, given the decidedly mixed performance of some members of this once-illustrious group, and this data underlines the fact that this group of seven big names is not powering the market as it once did.\u201d<\/p>\n
By contrast, some of the most overlooked sectors in the FTSE 350 have outperformed.<\/p>\n
For example, the FTSE 350 consumer staples sector is up 2% over the same period, a 3.2 percentage point outperformance. For comparison, consumer staples represent just 12.9% of the FTSE 350\u2019s index weight, according to data from FTSE Russell.<\/p>\n
Investors would have performed even better in sectors including telecoms or industrial metals, which have surged 13.7% and 20% respectively this year. The report noted even investing in a \u201ctraditionally\u201d defensive sector such as FTSE 350 utilities would have beaten the US tech cohort by 7 percentage points.<\/p>\n
Beauchamp added: \u201cAs fears about over-valuation and huge cash burn continue to play on investors\u2019 minds, the group has seen its performance lag behind other much less exciting sectors.<\/p>\n
\u201cThis is not to suggest that the magnificent seven are doomed to fall further and further behind, but it is a reminder to investors that they shouldn\u2019t become too attached to one sector or theme.\u201d<\/p>\n