It’s certainly no secret that the mega-cap tech giants in the Magnificent Seven saw stellar returns this year. Investors that focused their exposure in the Magnificent Seven mega caps this year have undoubtedly enjoyed the results. Nvidia is routinely considered one of the most desirable companies to hold, while Apple, Amazon, Alphabet, and Tesla are still sitting near all-time highs.
All that being said, more opportunities may be knocking for a wider range of equities in 2025. Continued interest rate cuts, combined with plans for a pro-growth U.S. agenda, could pose well for the equity market.
These broad equity perks come at a time while many investors remain concerned about potential overexposure to mega caps. Should a company like Nvidia experience an underwhelming earnings call, many market-cap weighted ETFs could quickly begin feeling the burn.
With all that in mind, adding more equity exposure outside of mega caps could pay off. In the December 2024 edition of “The BEAT”, the Eaton Vance team explained why investors should consider doing so.
“We view post-election dynamics as positive for U.S. equities with our base case soft landing view still intact,” the Eaton Vance team said. “We have added to U.S. equity exposure through non-mega cap segments of the market, which we believe to be better positioned for an expansion in earnings trends and valuations.”
Opportunity Knocks for Mid Caps
One especially attractive means to branch out from mega-cap stocks is through the use of a midcap ETF. Mid caps are in an especially good position to benefit from the Fed’s ongoing rate cutting cycle.
Take the Calvert US Mid-Cap Core Responsible Index ETF (CVMC ), for example. CVMC offers low cost access to a core selection of mid caps with responsible business practices.
Screening companies for responsible business practices can help the fund produce competitive results. Along with environmental factors, Calvert scrutinizes companies on their transparency, accountable governance, and ability to improve shareholder value.
Even in a year dominated by large caps, CVMC has provided investors with strong results. As of December 16, 2024, the fund’s NAV has risen by over 19% over the last year.
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