For technology stocks, the superlatives are endless this year. But rather than take profits and run, investors are flooding the space.
The sector is outperforming every other industry. In 17 weeks, only one has seen technology finish in the red. And more than US$1-trillion in market capitalisation has been added over the span of four months. Even with tech valuations at levels never seen before this bull market, the sector is seeing more interest than any other.
“Tech flows are white hot,” Steven DeSanctis, a US equity strategist for Jefferies, wrote in a note to clients on Sunday.
In the week ended 26 April, the top three US stock exchange-traded funds that attracted the most interest were tech-centric — the Invesco QQQ Trust Series 1, which tracks the Nasdaq 100, the Technology Select Sector SPDR Fund, and the Vanguard Information Technology ETF. And while US equities had more than $6-billion in net outflows last week, tech stocks saw $1.3-billion enter their coffers, according to Bank of America Merrill Lynch data, citing EPFR Global.
Fuelled in large part by a massive trade on 23 April, investors poured more than $440-million into the Vanguard fund, known by its ticker VGT, last week. That amounts to the largest weekly inflow ever for the $21-billion fund. It recently overtook its State Street competitor, XLK, to become the most popular technology sector ETF on the market.
Apple, which is set to report earnings on Tuesday, is VGT’s largest holding. Microsoft is the second largest, and combined, the two companies make up roughly 30% of the ETF. — Reported by Sarah Ponczek, (c) 2019 Bloomberg LP