Consumerism, work, and investing are all in the midst of dramatic alterations — much of it driven by digitization. That puts an emphasis on knowing the right exchange traded funds with which to capitalize on this trend. The Goldman Sachs Future Tech Leaders Equity ETF (GTEK) is a prime example of an ETF that is well positioned to help investors capitalize on what’s slated to be a lengthy evolution of digitization. An obvious benefit of GTEK on this front is that it is actively managed, implying that it can be more responsive to emerging trends than index-based competitors.
That’s something for investors to consider, particularly at a time when disruptive growth stocks are sagging due to high inflation, which is prompting aggressive interest rate tightening by the Federal Reserve — something that usually punishes growth stocks. However, inflation could ultimately prove to be beneficial to an assortment of GTEK components.
“We believe today’s inflationary environment will increase demand for key next-generation technology solutions in areas such as cloud computing and digital transformation,” according to Goldman Sachs Asset Management (GSAM). “There may also be beneficiaries of a focus on digital sovereignty by policymakers. For example, the recently passed CHIPS and Science Act in the US aims to incentivize domestic semiconductor manufacturing.”
As has been previously noted, some GTEK holdings are cybersecurity companies. Cyber criminals don’t take time off simply because inflation is high or the economy is struggling. In other words, regardless of the macroeconomic environment, corporations and governments can’t skip cybersecurity expenditures.
“Meanwhile, increasingly sophisticated cyberattacks that can have devastating financial and reputational impacts on companies are pushing management teams to rely on advanced solutions to secure their data,” added GSAM.
Against the backdrop of the aforementioned CHIPS and Science Act, which could include efforts to reshore more semiconductor production and potentially reduce the industry’s supply chain vulnerabilities, GTEK’s exposure to related equities is also relevant.
“Semiconductor capital equipment companies may benefit from broad-based moves reshoring supply chains and intensifying competition between the key leading-edge players,” concluded GSAM.
The $215 million GSAM, which recently celebrated its first birthday, holds 58 stocks. Its annual fee is 0.75% per year, or $75 on a $10,000 investment.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.