Diversification illusion? Apollo flags 401(k) exposure to Magnificent Seven group

[401K Paper cut out]
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Apollo Global Management’s chief economist, Torsten Slok, has raised concerns that many American workers may be less diversified than they assume when it comes to their retirement savings.

According to Slok, the typical U.S. employee contributes roughly $8,500 annually to a 401((k)) plan. With about 71% of 401((k)) assets allocated to equities—and the Magnificent Seven technology giants representing nearly 40% of the S&P 500’s weighting—a significant portion of those contributions are flowing into just a handful of stocks.

In effect, each U.S. worker is investing an estimated $2,300 per year into the Magnificent Seven, Slok explained, noting that roughly one-quarter of total 401((k)) contributions end up concentrated in those companies.

He emphasized that this dynamic occurs automatically through passive investment vehicles, such as index funds, regardless of how those companies are performing. While passive investing has proven effective for long-term wealth building, Slok cautioned that the growing concentration of capital in a few dominant names could leave investors more exposed than they realize, undermining the benefits of diversification.

Ranked below are the Magnificent Seven according to Seeking Alpha’s analyst ratings:

No. 1: Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]), quant grade of 4.17.

No. 2: Meta Platforms (META [https://seekingalpha.com/symbol/META]), quant grade of 3.92.

No. 3: Alphabet (GOOG [https://seekingalpha.com/symbol/GOOG])(GOOGL [https://seekingalpha.com/symbol/GOOGL]), quant grade of 3.88.

No. 4: Microsoft (MSFT [https://seekingalpha.com/symbol/MSFT]), quant grade of 3.70.

No. 5: Nvidia (NVDA [https://seekingalpha.com/symbol/NVDA]), quant grade of 3.48.

No. 6: Apple (AAPL [https://seekingalpha.com/symbol/AAPL]), quant grade of 2.82

No. 7: Tesla (TSLA [https://seekingalpha.com/symbol/TSLA]), quant grade of 2.50

MAGNIFICENT SEVEN ETFS: (BATS:MAGS [https://seekingalpha.com/symbol/MAGS]) (BATS:MAGX [https://seekingalpha.com/symbol/MAGX]) (NYSEARCA:QQQU [https://seekingalpha.com/symbol/QQQU]) and (NYSEARCA:QQQD [https://seekingalpha.com/symbol/QQQD]).

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