Tech has proved to be a very resilient source of growth this year and for good reason. It may feel like a long time ago, but ChatGPT has only been in the public eye for a few months. Machine learning programs like ChatGPT and other AI functions aren’t the only tech themes to watch, however. With a soft landing increasingly likely, investors may want to consider an equal-weight tech ETF like DTEC.
A soft landing, of course, depends on several factors. The Fed’s next meeting on whether or not to raise interest rates will play a role. At the same time, continued cooling inflation indicators dropping would also help. In any case, markets have come a long way from entering the year watching the horizon for a rate hike-induced recession. Earnings have proven durable, at the same time. Should the Fed be done with the rate cycle, markets can start looking forward to possible rate cuts next year.
The present market environment, then, could be a solid time to buy into a tech strategy. Investors looking to do so have one key issue to watch, however, in the top-heavy nature of the S&P 500’s returns. Tech’s rise has owed much to just a few names like the mega-cap tech firm Apple (AAPL). A poor turn of events for those top names could sour their part of the tech landscape.
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That’s where an equal-weight tech ETF like DTEC comes in. DTEC, the ALPS Disruptive Technologies ETF, charges a 50 basis point (bps) fee to track the Indxx Disruptive Technologies Index. DTEC tracks an index of ten themes such as clean energy, cloud computing, fintech, robotics & AI, and more. The ETF chooses ten stocks from each theme per the manager’s proprietary model and equal weights them. That not only gives the stocks an equal weight but gives the themes an equal weight, too.
The equal-weight tech fund has returned 14.6% YTD, sitting above $100 million in AUM. In an environment with some persistent uncertainty, but also some support for a growthier, tech mindset, DTEC can appeal.
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