ETF Battles: A Mag 7 Big Tech Growth Stock Duel with TECL vs. FNGU vs. MAGX!

Has anyone watching bothered to look at the Bloomberg Billionaires Index? Well, the Bloomberg Billionaires Index is your snapshot of how people are making fortunes, and among the top 10 billionaires, there's a high concentration of wealth being created in one particular industry sector. Can you guess what it is? Yes, it's technology, and eight out of the world's 10 wealthiest billionaires made their fortune in this particular industry sector.

Now today's ETF battle is an audience-requested triple header contest between ETFs focused on the technology sector. This is going to be good. Stick around, you're watching ETF Battles. I'm Ronda Legi, this is season six of our original series, and if you're new to our channel, well welcome aboard. Be sure to hit that subscribe button and the like button if you've been enjoying our content. Also, be sure to send us your ETF battle requests in the comment section below or on our X feed.

You send us those ticker symbols, make it good, and we'll take a look at it. Also, in the description section below, I've got links to our program judges. I've got links also to our program sponsor, Direction, who has been expanding their ETF lineup. They've got a mess of single stock ETFs which have taken off in terms of popularity and trading volume and assets, so check that out.

Let's get right to it. Now we've got today's audience-requested ETF matchup given to us from T123, that's the viewer, and it's a leverage tech products between Ron Hill, Rex Shares, and Direction. When we think about technology, it encompasses so many themes from AI to blockchain to data storage, and thank you so much T123 for this battle suggestion. We've got MAGX going up against FNGU.

So this is a good one, helping us to sort through it. We got Athan Feras, an ETF analyst with Bloomberg, and Dave Krines with ETF portfolio management judges. Great to have you back. Hey Ron, Athan, it's battle time. Hey guys, nice to see you both.

Yeah, so we got cost, exposure, strategy, performance, and mystery as the four categories. We're going to blaze right through them, give our judges an opportunity to weigh in. At the end of the show, we'll declare an overall winner. Keep in mind none of the battle outcomes on this program are ever predetermined or known in advance by myself or our judges. The first category is cost. Let's kick things off with Dave. Dave, please get us started.

You know, Ron, we did our first epic FNGU battle back in June 2020, and I called FNGU the LeBron James of funds. Now that Luca Donic was just traded to the Lakers this month, you know Lakers Showtime is back. It's going to be amazing. Now on cost, these three leverage tech funds all charge about 95%, and while that is far more than the unlevered S&P or NASDAQ 100, these levered funds give you two times to three times your principal exposure, plus they offer more targeted position concentration, which can be good at times. While the cost category could easily be a split decision, I give the cost win to FNGU for superior total value.

That said, FNGU is an ETN, which is an exchange-traded note, so investors must be aware of the factors regarding issuer risk and the maturity date.

Well, thank you for that strong start and taking a dig at Western Conference teams, non-Laker teams. I don't know how that's going to be received by the viewers, but thank you very much, Dave. Athan, you're up next on cost. How do you see it?

Well, I am reporting from the East Coast over here. You guys are on the West Coast, but they're all a little on the higher end. Just keep in mind because they're all leveraged, they're anywhere from 94 to 95 basis points. They're all in the same category. The reason they can charge a little bit more is because typically people won't hold this for a long time. They're kind of in and out of it, so the feed tends to be a little bit higher.

FNGU is the largest of it. It's got 8 billion. Tech's got 3 billion. MAGX is pretty new. It's only got a few in it, so because the headline expense ratio is so close, FNGU trades the most. It's got the best spread, so I think from a total all-in cost, I would also give this one to FNGU, just because of its ability to, because a lot of people want to trade this, so you got to just make sure that it's pretty seamless. So I'll give this overall cost to FNGU.

That takes us next to exposure strategy, and Athan, you're still up, so break it down for us. Yeah, so this is obviously, it's all tech focus, but they're all slightly a little bit different. Let's start with FNGU. That's the Fang names. If you remember that acronym, we love acronyms, right? But it's the Fang stocks plus a couple other, so it's 10 stocks total, very, very concentrated. It's Apple, Amazon, Nvidia, those types of names. So just keep in mind, super concentrated portfolio.

Then we'll go second to MAGX, which is pretty self-explanatory. It's the Mag 7, so that's Apple, Microsoft, Amazon, Meta, Nvidia, etc. Again, only seven stocks, very, very concentrated. Tech is essentially going to be just 3x on XLK, so yes, it'll still be kind of he weighted towards Apple and Nvidia and Microsoft at the top, but you're getting all the different all the S&P 500 tech name in there, so it's much more diversified. It's still within tech.

The one thing to mention, MAGX is 2x, the other three are three times, or the other two are three times leverage, just something to keep in mind. I think frankly, the way the industry is going, it's going more towards more concentration, right? So if you want something that's very, very concentrated, you're going to use FNGU and MAGX, but I think just given that tech tends to be heavily weighted anyways, you are getting some pretty topheavy exposure in TQQQ anyways. I like MAGX for exposure. I think the Mag 7, you're getting that anyways in techos, so I think it's just it's nice with MAGX, you can just focus in on that concentrations.

These bets have been paying off in the market being more concentrated. That's just how the industry is going, so I will give the exposure point to MAGX. Dave, you're up next, how do you see it when it comes to exposure?

Well, all three of these funds have phenomenal exposure to leading growth companies, and as Athan articulated, FNGU gives you three times leverage with equal exposure to 10 big liquid tech stocks, which do change at times. MAGX is two times leverage on the Mag 7, and TECL is three times leverage on the technology index. It's interesting to note of these three funds, MAGX is the only one that currently includes Tesla, and investors should be super careful with risk assets, especially when using leverage, and even more so with extra position concentration.

At ETFm, we typically favor wildcard ETF symbol TQQQ for the three times NASDAQ 100, which has broader diversification. You know what was coming, so I give the lever technology exposure win to wildcard TQQQ, and in its absence here, I give the exposure win to FNGU for three times exposure on Mega Cap Technology.

All right, well that takes us next to performance, and Dave, you're still up, so break it down for us. How do these three products match up now? Performance can be confusing when looking at multiple time frames, and MAGX only has one year of actual data, so this chart shows over the past decade, TECL delivered 26 times your money or 40% annualized. TECL even outperformed the American Dream ETF TQQQ, which gave you almost 21 times your money, and over the trailing five-year and one-year periods, FNGU clearly stands out. However, all three of these funds got clobbered in 2022, down by 74 to 88%.

So bottom line is it's a tough call. All of these funds are spectacular, and on a risk-adjusted basis, given the broader diversification, I give the performance win to wildcard ETF TQQQ, and among these battle options, I give the performance win to the LeBron James of funds, FNGU.

All right, well thank you very much, Dave. Athan, you're up next, give us your take on performance. Yeah, like David said, FNGU is, TECL is the oldest, MAGX is pretty new. That's only about a year old. FNGU is from 2018. It's kind of a fun fact at one point Tech was the best performing ETF of all time. Obviously, you can imagine, right? 3x Tech has been very, very good.

So over the long run, it's been phenomenal. Over the consist over the same time frame from when MAGX launched, it's pretty much the same as Fang U. Again, it's mostly the same stocks, but like David said, you're not getting Tesla. The performance has been really, really close, but wait a second, isn't Tesla included in T's underlying index? Tesla is part of the S&P 500 now, no, but it'll be discretionary.

What do you mean? I think it'll be in the in the consumer discretionary sector versus Tech will just be XLK essentially, so you're getting Amazon. Yeah, it's kind of a, but in the MAGX and and you'll you'll get it, and so that doesn't necessarily just look at the S&P 500 makes sense. Yeah, because Tesla's one of those weird companies that has it, it's like is it consumer, is it tech, is it ex what is it because it's got its hands in so many things, so that's a good point that you mentioned that just clarify that point again because it even got me confused.

Ethan, yeah, sure. So about tech, a lot of people might be thinking you're going to get Tesla in there, but just the way uh these classification system works, Tesla's technically a discretionary stock, so it would fall in the XLY, not the XLK, and Tech is 3xx XLK, so just keep that in mind, you'll get it in MAG in the Mag 7, but you you won't get Tesla in um in Tech. It does traditionally fall in that sector.

But on on the and then even just because you're getting more diversification with TECL, that actually hasn't worked to your favor since since their common Inception date, but I think just it's been so hot right out of the gate and you rarely see that. I'm going to give it to MAGX, the performance, it's it's 20 a year old, it's it's basically like FNGU and I like FNGU too, it's been around for a long time, it's performed really, really well, but I like that I like this this 2x MAG exposure, it's coming hot right out of the gate, so I'll give the performance, just it's I like the new ETFs too and and very concentrated, I'll give this one to MAGX.

All right, well that takes us to the mystery battle category. This is where our judges can name a certain factor or any factor that they feel is crucial to today's contest. So, A, what is your mystery battle category and which of these these products wins it?

Sure, I will. It's something that David alluded to earlier, and that FNGU is an ETN and the other two are ETF, so just a distinction for investors to just know that the ETN is technically a note, you know, Bank by backed in this case by Bank of Montreal. It's nothing to really worry about these. It's not like it was during the financial crisis. These are very well uh you know capitalized and it's got 8 billion in assets, but one thing interesting about that one, it won't pay out any interest. Sometimes these lever stuff will still have a capital gain distribution or be paying out income.

You're not going to get that with the ETN, so just it's got a little bit of a tax Edge to it, so I will give that mystery category to FNGU just of its unique structure being an ETN. Dave, you're up next, give us your mystery battle category, what is it and which of these products wins it?

Well, my mystery category is still position waiting, and at ETFm, we could allocate up to 60% of our active strategies in TQQQ, while we would cap exposure to these other more concentrated funds closer to 20%, so I give the position size win to wildcard TQQQ for broader exposure, and in its absence, I'll call the position size a split decision.

Well now we move to the part of the program where our judges can give us their overall battle winner. So Dave, you're up, give it to us. Ron, to recap this leverage technology Love Fest, these funds are all incredible. They are all capable of delivering Sensational performance at times. Obviously, given their risk, people must have the right position size or use active risk controls to protect principal regardless. Go slowly and be super careful.

That said, I do believe top leveraged funds and cryptocurrencies are the future of investing, and it's very interesting to see how much the time period matters. This past decade, TECL beat TQQQ. However, over the past 15 years, TQQQ strongly outperformed. This graph shows TQQQ delivered 215 times your money versus 133 for TECL, so I give the leverage battle win to the more Diversified wild card TQQQ, and among these three amazing battle funds, I give the win to FNGU.

All right, well uh Athan, your final chance to weigh in with your overall winner, give it to us. I think Dave nailed at the end. They're all great because they're all US tech, right? And it's been just it's a great thing to own uh no matter which one of these that you pick. I'm actually going to go the opposite of the diversification case that David said. I want to be concentrated.

I I'll take the I'll take MAGX. It's got Tesla in there too. Combined these end up having about a 35 or so percent weight of the S&P anyways, right? So you're sort of just getting the the top the top part of it. So I like that very concentrated basket, and it's only also 2x, so yes, it's concentrated, but it's got a little bit less leverage than the other two, so uh I think overall I'm going to give it to MAGX. I like I like being concentrated uh when it comes to this type of stuff.

So uh overall uh MAGX. Well, our judges have spoken, and just before I read off our battle scorecard, Dave, I want to confirm something with you. You had mentioned TQQQ as a wild card Choice. Do you feel more strongly about that than FNGU?

I do. You can have a much larger position there, and in a crash environment, FNGU is going to be a bit more painful, so TQQQ would be the winner, but FNGU is definitely a very close second.

All right, well our judges have spoken, and according to my final battle scorecard, the referee had to do a double check. It's going to be a split decision between TQQQ and MAGX, and I think our judges laid out their arguments very well. We had Dave, of course, he liked FNGU for many reasons, but in the end he he did defer to TQQQ, uh that's three Q's which uh which you know depending on the time frame you've been looking at, you know it has underperformed or outperformed in various time frames, but it has very very impressive performance historical performance. Of course, we don't know in the future how it'll do, but nevertheless that was his choice.

Then we've got uh Athan favoring MAGX, which is a relatively new ETF uh focusing on those Mag 7 uh stocks, and of course he made his uh his argument very strong in in favor of you know concentrated exposure. Now of course with all these products, they do use daily leverage at resets on a daily basis, and so that's something also to be aware of. They are really designed as short-term trading instruments.

So again, great job by all of our judges laying out today's ETF battle, and we couldn't have done it without you. Think this was fun. Thank you, Ron. Thanks Athan. Happy trading everyone. Well again, thanks to Dave and Athan for sharing your in timely insights and today's ETF Showdown.

Keep up the good work. Be sure to visit the description section below for links to our judges and also while you're there, check out the link to our program sponsor direction as I mentioned earlier, lots of choices if you're looking at leveraged or leverage short and various iterations 2x 3x uh if you're looking for something Direction probably has it, so be sure to check that out from single stock ETFs to broadly broader Diversified uh indexes as well as sector indexes, just so many choices. Again, be sure to visit direction.com to learn more.

A big thanks to T123 for this episode uh request and suggestion. It was good. What about you? Do you have any matchup uh in mind matchups in mind that you'd like to see? Well, be sure to send us your ETF ticker symbols in the comment section below or on our X feed at ETF guide. I'm Ronda Lei, thanks for watching. We'll see you on the next episode.