At least one of the reasons for this is easy to comprehend: Many of the most widely held, large-cap technology companies hold some of the most impressive free cash hoards in Corporate America. Due to those war chests, tech companies typically are not large borrowers, meaning they are not as vulnerable to rising rates as, say, the utilities sector. [Interest Rate Increase Hits Utilities ETFs]
Confirmation of tech’s relatively meager presence in the domestic corporate bond market can be found with the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: LQD). The largest investment-grade corporate bond ETF allocates just under 6% of its weight to tech, making it the fund’s seventh-largest sector weight.
Technology Select Sector SPDR
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Cisco, Intel and LQD.