Looking at different exchange traded fund (ETF) sectors, one can make a general statement that one sector is doing better than another. But it might not be a good idea to make a broad generalization. Gary Gordon for ETF Expert found an example with the technology ETFs.

Technology ETFs generally have held up well lately. However, PowerShares Dynamic Technology (PTF) is an example of a technology ETF that has taken a beating even though it has many large companies in it such as Cisco (CSCO), Apple (APPL) and Microsoft (MSFT). Yet if one looks at the Vanguard Information Technology (VGT) that has those same giant companies in its top holdings, it’s doing much better than PTF lately. How can this be?

The secret is that PTF spreads its weightings more evenly among its holdings. Conversely, the top 10 holdings in VGT make up 48% of the ETF. This just goes to show investors should look inside the ETF to know exactly what they are getting.  Not all ETFs are made the same.


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.