Tech ETFs: VGT, RYT, IYW, XLK. The Apple question.

10 Mar

I subscribe to several for-pay services.  Some I like more than others.  Ones that consistently rank high with me are Marketclub/INO,  Zacks and Bespoke Investment Group (“BIG”).  BIG is rather different to the other two.  If you like data-driven analysis, you’ll like BIG.  BIG is invariable professional.  You may see them frequently quoted in the financial press.  They recently reported the results of their first voluntary members’ survey, which is what piqued the impetus for this article.  The survey covered both individual and institutional investors.  Self-serving it may be, but I happen to think the paying customers of BIG are smarter than the average bear.  Key point for this article is that both the individual and institutional investors liked Technology as the best sector for the next six months.

As an investor with my own money, I tend to using ETFs, although I will take individual equity positions.  It depends on the term and portfolio I’m investing in.  I considered four broad-based technology ETFs to play a possible positive ride in the technology sector (click on the chart to enlarge):

techs

tech etfs

The Rydex equal-weight ETF has romped away from the others, due largely, one supposes, because it has way less exposure to that laggard du jour, AAPL.  The AAPL percentages, BTW, are at 3/8/13 for RYT and 12/31/12 for the other ETFs.  The latter percentages may have changed some since 12/31 due to AAPL’s sell off and and increase in other portfolio stocks.  Be that as it may, some folk might think that with AAPL changing hands at a P/E of about 9, that as it hovers at a price somewhat above $400 it may be worth considering.  In which case, depending on your loving or loathing for all things AAPL, you may wish to consider which tech ETF best suits your purpose.  If you think AAPL will continue to be a loser then RYT is the way to go despite a healthy expense ratio of 0.5%.  Were I to want some AAPL exposure I would probably lean to VGT.  An alternative approach, trading costs be damned, might be to blend the two ETFs depending on how you love or loathe AAPL.  Your intended holding period would impact your decision, too.

The BIG members offered pretty mixed insight.  AAPL was the biggest long position in the portfolio of by far the most respondents.  On the other hand, it was also the stock that by far the most respondents were most bearish on.  Go figure. But, that probably sums up market sentiment on AAPL too.  You can check out free stuff (and there’s a lot of it) from BIG HERE.


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