By Michael A. Gayed, CFA
- The Vanguard Information Technology ETF is a great way to get exposure to a number of high-quality, high-flying names.
- Some may be concerned about higher valuations, but tech is well within a historical range.
- From a technical perspective, VGT looks ready to continue momentum.
The stock market is filled with individuals who know the price of everything, but the value of nothing. – Philip Fisher
As I mentioned in the Lead-Lag report last week, it will obviously come with risk. But the opportunity is there for the taking. Taking a look at the breakdown of the holding from a sector perspective, you have a number of high-margin sectors that are benefiting from the generational shift to technology.
According to the Vanguard website, the top sectors by weight are Systems Software (20.1%), Technology Hardware, Storage & Peripherals (19.3%), Data Processing & Outsourced Services (16.7%), Semiconductors (15.3%) and Application Software (11%).
That is pretty diversified across the technology industry, and definitely deserves attention for your portfolio. A look at the top 10 holdings has a number of names that are attractive, bellweathers of technology with strong economic moats surrounding.
Making up about 56.4% of the portfolio are Apple (AAPL)
, Microsoft (MSFT)
, Visa (V)
, Intel (INTC)
, Mastercard (MA)
, Cisco Systems (CSCO)
, Adobe (ADBE)
, Oracle (ORCL)
, Salesforce.com (CRM)
, and International Business Machines (IBM)
. Those names alone give you exposure to a number of mature, dividend-paying tech companies alongside some higher-growth, high-beta names, which is the type of portfolio I would recommend at this late-stage bull market run.
High Valuation? Not to worry
Many will cite the concern with valuation at these levels, which is sitting around 25.5 P/E.