Investors have poured into stable, old technology stocks last year, but are quickly becoming disappointed by the group’s uninspiring expansion. Consequently, more are taking a look at high-growth tech names and sector-related exchange traded funds.
Jim Cramer, the “Mad Money” host, highlighted a large rotation in dedicated money out of plain-vanilla tech names and into more growth-intensive companies, reports Abigail Stevenson for CNBC.
The shift in dedicated money is significant as the money-management core principle shies away from frequent trading and usually promises to stick with a sector after money has been allocated.
The change in strategy occurred in response to disappointing results and low guidance from Intel (NasdaqgGS: INTC) and Microsoft (NasdaqGS: MSFT). Additionally, Hewlett-Packard (NYSE: HPQ) reported poor earnings Tuesday earnings, which sent company stocks plunging 10% Wednesday.
Consequently, while money managers typically don’t leave a sector entirely due to diversification needs, they have moved into another area of the tech space. Cramer pointed out that asset managers have shift away from low-growth value stocks and into high-growth tech names, such as Google (NasdaqGS: GOOG), Facebook (NasdaqGS: FB), Amazon (NasdaqGS: AMZN), Netflix (NasdaqGS: NFLX) and Priceline (NasdaqGS: PCLN).
Investors who are interested in diversified exposure to these growing internet names can utilize ETFs that track social media and internet sub-sectors. For instance, the Global X Social Media Index ETF (NasdaqGM: SOCL) includes GOOG 4.9% and FB 10.3%. SOCL is finally breaking out of its downtrend from the September high, according to J.C. Parets for All Star Charts. Additionally, SOCL has been trading in an ascending triangle formation since breaking out in February – the bullish chart pattern illustrates a horizontal resistance level coupled with a second upward trendline that connects the series of rising lows. Consequently, a breakout above this new horizontal resistance can be a very bullish indicator for chart watchers. [Social Media ETF Could Finally be Ready to Socialize]
Moreover, the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) and the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) both include prominent growth names. PNQI holds AMZN 8.9%, FB 8.0%, GOOG 7.9%, GOOGL 7.8%, NFLX 5.4% and PCLN 4.2%. FDN tracks AMZN 8.3%, FB 7.9%, PCLN 5.5%, GOOG 4.7%, GOOGL 4.7% and NFLX 4.4%. [Internet ETFs Confirm Rally Likes Risk]
For more information on the tech space, visit our technology category.
Max Chen contributed to this article.