ETF Trends CEO Tom Lydon discussed the Goldman Sachs Future Tech Leaders Equity ETF (GTEK) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
GTEK is a fully transparent, actively managed equity ETF that will generally invest in listed technology companies with market capitalizations of less than $100 billion across both developed and emerging markets. Goldman Sachs intends to invest in the fund alongside its clients.
Investors do not have enough exposure to up-and-coming companies of the future. Almost a quarter of the S&P 500 market capitalization is in the top 1% of stocks. Many investors are overexposed to mature U.S. mega-cap technology companies. Too many are focused on Apple, Microsoft, and Google. There is a disconnect between where investors are positioned in technology companies today and where the best potential investment opportunities over the next decade are being seen.
A decade from now, the dominant tech landscape will be very different from the platforms known today. Over the past few decades, most of the innovation seen in tech has been concentrated in the U.S. and centered around a few companies. Goldman Sachs believes that the market is at a key inflection point, with tech innovation expanding to other geographies and down the market capitalization spectrum.
Where Are the Opportunities?
Opportunities can be found in areas including smart components, digital transformation, fintech, and cybersecurity. The current pandemic has further accelerated the digitization trend, creating additional secular growth tailwinds.
Tech leaders will play a monumental role in figuring out a path to a green future and dealing with the ongoing COVID-19 pandemic. Tech innovation will also affect all sorts of components of people’s lives — their hobbies, social lives, and even their art and entertainment are inevitably going to intersect with technology.
As mentioned, GTEK is actively managed to target global innovators. The fund looks beyond backward-looking benchmarks to identify innovative, attractively valued companies aligned with durable secular growth themes.
It invests in technology companies with market capitalizations of less than $100 billion, seeking to give investors exposure to the next generation of potential tech leaders. The fund also draws on 80+ experienced investors worldwide, conducting active, bottom-up security selection with a strong valuation discipline to identify the highest conviction technology investment ideas globally, across both developed and emerging markets.
Listen to the full podcast episode on GTEK:
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