Tech Sector Lags Communication Services Despite Super Micro, Nvidia Surge
Over the past six months, the tech sector has been trailing behind communications services.
XLK Is A Solid ETF But SCHG Appears Best In The Bull Run
The S&P 500 continues to achieve new records, with tech stocks expected to drive the bull run in the second half of 2024. Investing in tech ETFs like XLK can offer exposure to the tech sector while lowering risks associated with single-stock investments. SCHG may be the best option for investors seeking big risk-adjusted returns in the current bull run, with a strong portfolio and quant analysis rating.
Is Market Broadening an Illusion? AI-Driven ETFs Doing the Trick
The AI frenzy emphasized the significance of the extensive opportunities within the AI ecosystem. As a result, investors are leaving no stone unturned to tap the AI ecosystem in every form.
XLK: The Rebalancing Reversal
Technology sector has outperformed since October '23, but recently saw extreme divergence with a gain of over 9% while other sectors dropped. XLK underwent quarterly rebalancing, reducing Apple's weight while increasing Nvidia's, leading to instability in the sector. XLK's correction may stabilize, with key levels at $221.95 and $217.72 determining future momentum.
Here's What You Need to Know About Tech ETF XLK's Shake-Up
Technology Select Sector SPDR Fund (XLK) is poised for a big rebalance this week. This shake-up will increase the exposure to NVIDIA Corp. (NVDA) at the expense of Apple Inc. (AAPL).
Can Tech ETFs Keep Up Their Winning Momentum?
Investors maintained their bullish stance on stocks for the seventh consecutive week, pouring $4.6 billion into U.S. equity funds. U.S. technology stocks recorded their largest weekly inflows last week in nine weeks, with the sector seeing a revival after its mega-cap-led rally lost steam by the end of May, per strategists at BofA Global Research, as quoted on MarketWatch.
Should You Invest in the Technology Select Sector SPDR ETF?
The Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors. Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%. The fund is sponsored by State Street Global Advisors. It has amassed assets over $65.63 billion, making it the largest ETF attempting to match the performance of the Technology - Broad segment of the equity market. XLK seeks to match the performance of the Technology Select Sector Index before fees and expenses. The Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same. Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space. It has a 12-month trailing dividend yield of 0.70%. Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis. This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio. Looking at individual holdings, The top 10 holdings account for about 67.46% of total assets under management. So far this year, XLK has added about 10.22%, and was up about 38.16% in the last one year (as of 05/20/2024). During this past 52-week period, the fund has traded between $154.31 and $213.03. The ETF has a beta of 1.14 and standard deviation of 23.93% for the trailing three-year period, making it a medium risk choice in the space. With about 68 holdings, it effectively diversifies company-specific risk. Technology Select Sector SPDR ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XLK is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well. To read this article on Zacks.com click here.
XLK: Sitting On The Sidelines For Now On Mixed Outlook
The technology sector has been one of the best performers with strong earnings growth and a high ratio of earnings beats. The Technology Sector Select SPDR has a low expense ratio compared to competing products, resulting in potential long-term savings. The concentration of the ETF in a few top holdings and the high valuation of the tech sector are potential concerns for investors.
