More than ever, financial advisors can't stress enough about the importance of having large cap tech exposure. The same sector that spearheaded the decade-long bull run is continuing its dominance amid the Covid-19 pandemic with a heavier reliance on tech, but investors need to know there are other options out there besides the biggest ETFs.
In terms of sheer size, an increased reliance on tech in today's digital economy will benefit funds like the Invesco QQQ ETF (NASDAQ: QQQ). Despite some market headwinds coming like the ongoing pandemic and uncertainty surrounding the U.S. presidential election, tech ETFs like QQQ should be poised to come out ahead of the game.
QQQ seeks investment results that generally correspond to the price and yield performance of the NASDAQ 100 Index. To maintain the correspondence between the composition and weights of the securities in the trust and the stocks in the NASDAQ-100 Index, the adviser adjusts the securities from time to time to conform to periodic changes in the identity and/or relative weights of index securities. The composition and weighting of the securities portion of a portfolio deposit are also adjusted to conform to changes in the index.
Another Option Aside from QQQ
However, QQQ isn't the only large cap tech fund in the growing ETF universe. Another fund to consider is the iShares U.S. Technology ETF (IYW).
Just like QQQ, IYW gives investors exposure to the biggest movers and shakers in tech like Apple and Microsoft. Other companies in its top 10 holdings include other familiar names like Facebook and Google.
IYW seeks to track the investment results of the Dow Jones U.S. Technology Capped Index. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. The underlying index measures the performance of U.S. companies in the technology sector.
IYW gives investors:
- Exposure to U.S. electronics, computer software and hardware, and informational technology companies
- Targeted access to domestic technology stocks
- Use to express a sector view
Regardless who wins the election, technology will play a vital role moving forward. The current administration is already aware of the need to advance technology to keep with the changing times.
"As our competitors and adversaries mobilize vast resources in these fields, American dominance in science and technology is more important now than ever, and is vital to our long-term economic and national security,” said White House press secretary Kayleigh McEnany said in a statement .
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