3 Reasons To Diversify Investments Beyond ‘Magnificent 7’ and Consider GRANOLA Stocks
Have you been investing in FAANG stocks or even the “Magnificent 7,” which is a collection of tech-focused U.S.-based stocks? In 2013, four tech stocks stood out, earning the collective name, “FANG.” In 2017, the acronym expanded to encompass Facebook, Amazon, Apple, Netflix and Google.
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In 2023, the Magnificent 7 moniker emerged to describe an expanded group of tech stocks: Microsoft, Amazon, Meta Platforms (formerly Facebook), Apple, Alphabet Inc. (formerly Google), Nvidia Corp., and Tesla.
But there’s another name savvy investors should know: GRANOLAS. These stocks don’t (necessarily) have anything to do with the crunchy treat preferred by hikers and healthy snack enthusiasts. Rather, they are 11 European-based companies that represent a broad cross-section of the market, ranging from luxury brands to biopharmaceutical companies.
In spite of being international brands, many are traded on the New York Stock Exchange. Yet, they are not correlated strongly with the S&P 500, according to SeekingAlpha.com.
The stocks in the category are: GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP, and Sanofi.
Today’s investors are finding multiple reasons to diversify their holdings into the GRANOLAS stocks.
GRANOLAS Stocks Have Outperformed the Market Since June 2022
This diverse collection of stocks has delivered 60% of the gains in the European stock market in the past year, according to Goldman Sachs analysts, and have outperformed the FAANG stocks for the past two years, Morningstar.com reported.
Plus, most of the stocks on the list deliver dividends of 2% to 2.5%.
They Provide Diversification
While tech stocks tend to fare well in the U.S., a portfolio made up of FAANG stocks doesn’t provide much diversification. On the other hand, the GRANOLAS stocks represent sectors ranging from consumer goods to fashion, technology and healthcare.
They also aren’t tied to the S&P 500 or Nasdaq index. If the bulk of your portfolio is filled with U.S.-based stocks, adding some shares of even a handful of the GRANOLAS could serve you well.
Because of the diversity of the companies on the list, the collection also shows less volatility than the Magnificent 7. “The realized volatility of the GRANOLAS is on average 2x lower than for the Magnificent 7,” Chief Global Equity Strategist Peter Oppenheimer recently told SeekingAlpha.com.
The Companies Have a Solid Foundation
Each of the stocks in the GRANOLAS classification represent a strong, stable company specializing in things people need or want. Some, like LVMH and L’Oreal, have brand names that have stood the test of time.
Others focus on in-demand technology or pharmaceuticals with a tremendous market. Novo Nordisk jumped up 82% in the past year with the launch of weight loss drugs Ozempic and Wegovy.
Bottom Line
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If you’re looking to diversify beyond tech stocks and the S&P 500, consider the GRANOLAS as a solid way to build your portfolio.
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This article originally appeared on GOBankingRates.com: 3 Reasons To Diversify Investments Beyond ‘Magnificent 7’ and Consider GRANOLA Stocks