The technology sector, the largest sector weight in the S&P 500, has been one of the better-performing groups this year, a theme that is lifting exchange traded funds such as the Vanguard Information Technology ETF (NYSEArca: VGT) and the Technology Select Sector SPDR (NYSEArca: XLK).
For investors considering new positions in tech ETFs, the good news is that the sector may prove immune to the results of Tuesday’s presidential election. Impressive earnings reports have recently helped lift the technology sector and ETFs such as XLK. . Historically, after a profit falloff, the technology sector has been among the best areas in a rebound.
“The only sector that has record an increase in expected earnings growth since the start of the quarter (due to upward revisions to earnings estimates) is the information technology sector,” according to FactSet.
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VGT is a popular, cost-efficient avenue for investors looking for technology exposure via ETFs. Additionally, VGT has one of the largest weights to Apple Inc. (NasdaqGS: AAPL) among all ETFs.
XLK, the largest tech ETF by assets, has “had a strong year in aggregate. The sector has gained over 25% from its January trough and after pulling back to test its 100-day MA last week, is once again knocking on the door of a breakout to new decade-plus highs above the 48.00 level,” according to Investing.com.
Investors looking for tactical plays on chip stocks, a group that has been a key driver of tech sector upside this year, can consider the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) and the iShares PHLX Semiconductor ETF (NasdaqGM: SOXX).
[related_stories]In addition to chip stocks, XLK features exposures to tech hardware storage & peripherals, electronic equipment and Internet software and services.
“A big rally in a certain sector is not nearly as impressive if the overall stock market has rallied by a similar amount (or even more). Looking at the ratio chart (XLK/SPY), we can see the tech stocks have been outperforming on a relative basis as well,” notes Investing.com.
For more news and strategy on the Technology market, visit our Technology category.
Technology Select Sector SPDR
