As the Nasdaq-100 continues to push higher, it doesn’t appear as though certain hedge funds are sensing any frothiness. Per a Reuters report, hedge funds continue to load up on technology stocks as rate cuts loom.
Based on the report, said rate cuts should help increase spending as consumers can now borrow money at lower rates to finance tech product purchases. From a business standpoint, tech companies can also borrow money to fund ventures such as artificial intelligence (AI) platforms and the like. Either way, hedge funds are sensing a lower rate environment should benefit tech overall.
“Hedge funds placed almost three times as many long positions on the bet that information technology stocks would rise, compared to those with bets against them, said the prime brokerage note,” Reuters said.
To match hedge funds’ play on tech, consider the Direxion Daily Technology Bull 3X ETF (TECL), which has triple the exposure to the Technology Select Sector Index. The index includes domestic companies from the technology sector that includes the following industries: computers and peripherals; software; diversified telecommunications services; communications equipment; semiconductors and semiconductor equipment; internet software and services; IT services; electronic equipment, instruments and components; wireless telecommunication services; and office electronics.
Drilling Down on Semiconductors & AI
When it comes to specific sectors in tech, semiconductors are one to always watch. With big tech companies focused on AI, the processing power of semiconductors is crucial and hedge funds are aware of this.
“Buying in semi-conductor and related equipment companies outweighed selling in tech hardware, like computer, monitor and hard drive manufacturers, the Goldman Sachs note said,” per the Reuters report.
That said, traders may want to consider the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL). The fund tracks the largest movers and shakers within the industry. SOXL seeks daily investment results equal to 300% of the daily performance of the NYSE Semiconductor Index. That index is a rules-based, modified float-adjusted market-capitalization-weighted index that tracks the performance of the 30 largest U.S.-listed semiconductor companies.
As mentioned, interest in AI is a trend that could persist. As such, traders may want to capitalize on any short-term pops in the broad AI theme with the Direxion Daily AI and Big Data Bull 2X Shares (AIBU), which tracks the Solactive US AI & Big Data Index that represents companies that have business operations in the field of AI applications and big data.
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