Comparative Performance of the Magnificent 7, S&P 500, and IHSG: 20-Year Analysis

A research report on total return, volatility, and risk-adjusted returns across major global indices.

Executive Summary

This report provides a detailed analysis of the performance of the "Magnificent 7" stocks, the S&P 500, and the Indonesia Stock Exchange (IHSG) over the past 20 years. The analysis focuses on key metrics such as total return, volatility, and risk-adjusted returns, while also considering the impact of currency fluctuations and significant economic events. The "Magnificent 7" stocks have shown remarkable growth, particularly in recent years, significantly influencing the overall performance of the S&P 500. However, the IHSG has demonstrated resilience and growth driven by local economic factors, offering a different risk-return profile compared to the U.S.-based indices.

Sources: Visual Capitalist, Russell Investments

1. Introduction

The "Magnificent 7" refers to a group of leading technology and consumer companies that have significantly impacted the U.S. stock market, particularly the S&P 500, over the past decade. These companies include major players like Apple, Microsoft, and Amazon, among others. The S&P 500, a broad market index, represents a wide array of sectors in the U.S. economy, while the IHSG is a composite index representing the Indonesian stock market. This report aims to compare these indices' performance over the last 20 years, considering various economic and market factors.

Sources: Mellon, Investopedia

2. Key Findings

2.1 Performance Metrics

  • Total Return and Volatility: Over the past 20 years, the "Magnificent 7" stocks have outperformed the broader S&P 500 in terms of total return, driven by technological advancements and consumer demand. The IHSG, while not matching the explosive growth of the "Magnificent 7," has shown steady returns, influenced by Indonesia's economic growth and stability.
  • Risk-Adjusted Returns: The risk-adjusted returns of the "Magnificent 7" have been favorable, although they come with higher volatility compared to the S&P 500 and IHSG. The IHSG offers a different risk profile, often less volatile due to its focus on local economic factors.
Figure 1. Comparative total return and volatility of the Magnificent 7, S&P 500, and IHSG (2004–2024). Data is illustrative.
Sources: Visual Capitalist, Guggenheim Investments

2.2 Economic and Market Influences

  • Global Economic Events: Major global economic events, such as the 2008 financial crisis and recent geopolitical tensions, have had varying impacts on these indices. The S&P 500 and "Magnificent 7" stocks have shown resilience and recovery post-crisis, while the IHSG's performance has been more closely tied to regional economic conditions.
  • Currency Fluctuations: Currency fluctuations have played a significant role in the performance of the IHSG when compared to the U.S.-based indices. The strength of the U.S. dollar often impacts the relative performance of the IHSG, affecting international investment flows.
Figure 2. Index performance during major global economic events (2008 crisis, 2020 pandemic, etc.). Data is illustrative.
Sources: Market Intelligence, Russell Investments

3. Comparative Analysis

Metric Magnificent 7 S&P 500 IHSG
Total Return High Moderate Moderate
Volatility High Moderate Low
Risk-Adjusted Return Favorable Favorable Moderate
Impact of Global Events Resilient Resilient Regionally Influenced
Currency Impact Minimal Minimal Significant

4. Conclusions & Outlook

The "Magnificent 7" stocks have been a driving force behind the S&P 500's performance, offering high returns but with increased volatility. The IHSG provides a contrasting investment opportunity, characterized by lower volatility and returns influenced by local economic conditions. Looking forward, the continued evolution of global economic policies and technological advancements will likely shape the future performance of these indices. Investors should consider these factors, along with currency impacts, when evaluating potential investments in these markets. Further research could explore the evolving sector compositions and their implications for future performance.

Source: Ameriprise

5. Methodology

This report synthesizes data from publicly available financial sources and research publications. Key metrics such as total return, volatility, and risk-adjusted returns were compared across indices using historical data from 2004 to 2024. Economic event impacts were assessed using event-study methodology, and currency effects were considered for cross-market comparisons. All visualizations are illustrative and designed to highlight relative trends and differences.