The tech sector has demonstrated strength in the past two weeks, following the latest CPI release that showed inflation has eased by more than forecasted in October.
As a reminder, the October consumer price index rose 0.4% from the previous month, the Labor Department said in an economic news release on November 10. Notably, this was below economists’ expectations for an increase of 0.6%. Inflation rose 7.7% in October year over year — below projections for an increase of 7.9%.
Investors looking to reallocate funds to the technology sector should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT), which is based on the S&P 500 Equal Weight Information Technology Index.
RYT is different from cap-weighted ETFs offering exposure to tech stocks, because its underlying index utilizes an equal-weight methodology, meaning that component companies receive equal allocations at each quarterly rebalance. This results in exposure that is considerably more balanced than other alternatives, and a methodology that some investors believe will add value over the long haul. An equal-weight approach is particularly impactful in the top-heavy tech sector, which is dominated by just a handful of names.
As of November 22, RYT has increased 10.0% in the past month compared to the S&P 500 Index’s increase of 6.9% during the same period, according to YCharts. Over a six-month period, RYT has slightly underperformed the S&P 500, both increasing 3.5%. RYT is still down -20.1% year to date, making now an optimal time to allocate for investors who expect a less hawkish Fed going forward.
The S&P 500 Equal Weight Information Technology Index covers the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services.
For more news, information, and analysis, visit our Portfolio Strategies Channel.