This hedge fund is beating S&P 500 without relying on Magnificent 7; This is how

The pursuit of strategies that consistently outpace benchmark indices like the S&P 500 is a perpetual endeavor. However, amid this pursuit, a particular hedge fund has garnered attention for its claim that you can outperform the S&P 500 without depending on the renowned "Magnificent 7" stocks.

The claim was made despite the fact a recent report from S&P Down Jones Indices claims the Magnificent 7 “accounted for 37% of the YTD return” of the S&P 500.

Can you beat the S&P 500 without Magnificent 7? Yes

A report from Bloomberg revealed that two French Funds have revealed it is possible to beat the S&P without the Magnificent 7.

The report states that the two funds, Europe-focused €400 million Prevoir Gestion Actions fund, which has returned 17% year-to-date, and €50 million Prevoir Pangea, which invests globally and is up 25%, have done just that.

Bloomberg revealed that both have some exposure to Big Tech, including Nvidia Corp . (NASDAQ:NVDA) and ASML (AS:ASML), but they claim smaller companies, such as Super Micro Computer (NASDAQ:SMCI), have boosted their returns.

In addition, the funds are now looking at companies outside of the AI industry and into sectors such as Pharmacies, caterers, and haulers.

Fares Hendi, who jointly manages the two buy-and-hold equity funds with Louis Puga, told Bloomberg that they have always been underexposed to the Magnificent 7, adding that there “loads of companies doing better.” He pointed to stocks such as Chipotle Mexican Grill (NYSE:CMG) and Wingstop (NASDAQ:WING).

Furthermore, the publication revealed that the funds recently purchased shares of United Rentals (NYSE:URI), Builders Firstsource (NYSE:BLDR) Inc., and Saia (NASDAQ:SAIA). These are US businesses with valuations less than $50 billion. In addition, they are said to have bought shares of energy drinks firm Celsius Holdings (NASDAQ:CELH), while in Europe, the Prevoir Gestion fund acquired shares of CRH (NYSE:CRH) and Redcare Pharmacy NV (ETR:RDC).

The funds are said to have cut back on shares of Apple (NASDAQ:AAPL) and STMicroelectronics NV. Bloomberg notes that the funds have a strong five-year track record, with their data showing they have exceeded 99% of peers for the Europe-focused portfolio and 89% for the global one.