The S&P 500 has gained 16% year-to-date, with over 50% of that growth coming from tech stocks known as the Magnificent 7. However, Independent Franchise Partners US Equity (IFPUX) has returned 23.23% year-to-date with Oracle as its sole tech holding, while Vanguard Utilities Index Fund (VPU) has a 19.31% year-to-date return without any tech stocks.

The fear of an AI bubble is rising as trillions have been invested in AI development, sparking concerns of overvaluation akin to the dotcom bubble. The S&P 500’s 16% gain relies heavily on the Magnificent 7 tech stocks, with a significant market cap drop on November 20th. Funds like IFPUX and VPU offer alternative investment options for diversification.

IFPUX has seen success with its non-tech focus, outperforming the S&P 500 by 7 points in year-to-date returns. With an emphasis on companies with intangible competitive advantages, IFPUX has achieved a 23.23% YTD return across 150 stocks. Its top five holdings include telecom, consumer defensive, and healthcare sectors.

Vanguard Utilities Index Fund ETF Shares (VPU) has shown a 19.31% YTD return, tracking the MSCI US Investable Market Utilities 25/50 index. The fund features top utility companies like NextEra Energy and Constellation Energy in its portfolio, offering stability and growth in the utilities sector.

The utilities sector is on an upswing due to a focus on reliable oil and gas, reduced subsidies for solar and wind power, and increased electricity demand from data centers and EVs. VPU’s passive management approach has delivered a 19.31% YTD return, reflecting the strength of the sector and the fund’s composition of top utility stocks.

Investors are urged to consider diversifying away from the Magnificent 7 tech stocks, as overinflated valuations may lead to market corrections. Renowned investor Michael Burry has publicly shorted Nvidia, signaling potential risks in the AI industry. Funds like IFPUX and VPU offer opportunities for investors to hedge against tech exposure and explore alternative growth options.

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Read more at Yahoo Finance: 2 World Class Funds That Avoid The AI Bubble and Mag 7 Stocks