No Slowing Down for Surging Technology ETFs

Technology stocks and sector-related exchange traded funds have outperformed this year with some technology ETFs posting gains that are more than double those of delivered by the S&P 500. The Technology Select Sector SPDR Fund (NYSEArca: XLK), the largest tech ETF, is up more than 21% year-to-date, roughly double the gains posted by the S&P 500.

Even with the sector’s surge this year, rising valuations and some talk, albeit inaccurate, about another bubble, some investors believe tech is still the place to be.

XLK tries to reflect the performance of the Technology Select Sector Index, which is comprised of technology and telecom sector of the S&P 500. The ETF includes companies from technology hardware, storage, and peripherals; software; diversified telecommunication services; communications equipment; semiconductors and semiconductor equipment; internet software and services; IT services; electronic equipment, instruments and components; and wireless telecommunication services. Top holdings include Apple (NasdaqGS: AAPL), Microsoft (NasdaqGS: MSFT) and Facebook (NasdaqGS: FB).

“A lot of investors think big tech numbers are expensive; they’re absolutely right. They’re expensive relative to normal times, they’re expensive relative to their own recent or longer-term past,” Max Wolff, chief economist at Disruptive Technology Advisers, said in an interview with CNBC. “They still have great margins. So we still think they’re the place to be. I just think you have to keep your eye on where the exit is in all of these risk assets. For now, tech is the expensive but best place to be, as far as we see.”

Related: How Sector ETF Investors Performed in the Historically Weak Summer Period