The technology sector is rebounding this year. So are small-cap stocks and exchange traded funds. Those themes are good news for the Invesco S&P SmallCap Information Technology (NASDAQ: PSCT), which is higher by nearly 21% this year.
PSCT tracks the S&P SmallCap 600 Capped Information Technology Index. While the various sector-specific ETFs provide broad exposure to their targeted segments, investors should keep in mind that there are differences in the different ETF offerings.
“The Index is designed to measure the overall performance of common stocks of US information technology companies. These companies are principally engaged in the business of providing information technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors and communication technologies,” according to Invesco, the fourth-largest U.S. ETF issuer.
Small-cap tech stocks “are the upstarts in the tech world. They are where all the disruption and the new ideas start. They also feed into the bigger FAANG stocks and help drive mega trends even further,” according to Banyan Hill Publishing.
Inside PSCT ETF
The technology sector continues to grow through innovation as more shift to cloud, progress into artificial intelligence and adopt internet of all things devices.
The $336 million PSCT is home to 89 stocks with an average market value of $1.53 billion. Electronic components and equipment makers and semiconductor manufacturers combine for almost 56% of PSCT’s roster.
Semiconductor ETFs have recently been durable performers as semiconductor stocks are rebounding to steady the broader technology sector, but that does not mean the gains are over for this suddenly hot group. However, valuations are rising for chip stocks.
Small-capitalization stocks have attracted a lot of attention on the escalating trade tensions, fueled by fears over a potential slowdown in global growth. Consequently, many anticipated that small-caps could weather the storm as large multi-nationals with a large global footprint suffered from trade disputes.
“With the Invesco S&P SmallCap Information Technology ETF (Nasdaq: PSCT), you don’t have to pick a specific company to get in on the small-cap tech boom,” according to Banyan Hill. “That’s some impressive exposure for a single ETF. It’s practically a one-stop shop for companies with mega-trend potential.”
For more news and strategy on the Technology market, visit our Technology category.