Is Your Tech Fund Delivering?

It’s that time again: some huge names in technology and the broader stock market will report their earnings this week. With so much uncertainty around AI and the economy in general, markets will be watching results closely. Of course many investors have some exposure to these firms already and some double down on tech-specific funds. But due to the way in which certain firms are defined by their indexes, some tech funds may actually miss out on the leaders driving this week’s earnings results.

Key Takeaways:

• It’s tech earnings week and investors are watching closely for big swings.
• Flexible and tradable ETFs offer a powerful way to add to tech exposure already in broad market funds.
• However, not every tech fund captures the full spectrum of ‘tech’ leadership, making it essential for investors to verify a fund’s actual holdings.

Take the State Street Technology Select Sector SPDR ETF (XLK), for example. The fund includes names like Apple (AAPL) and Microsoft (MSFT), but it notably excludes giants like Amazon (AMZN) and Meta (META). These omissions occur because the index separates stocks into other sector-specific ETFs within the firm’s suite.

This demonstrates some of the inherent limitations of index-first, passive investing. While investors could theoretically hold a basket of sector funds to bridge the gaps, there are options that offer a streamlined approach and more flexible alternatives. For instance, an active tech ETF like TTEQ allows the freedom to invest in innovative companies across sector lines.

The T. Rowe Price Technology ETF (TTEQ) charges a 63 basis point fee to actively invest in technology and tech-driven companies. Managed by T. Rowe Price portfolio manager Dom Rizzo, the fund holds all the key tech names generally associated with tech earnings. This includes AAPL, AMZN, MSFT, META, and others. 

The fund’s operators use fundamental research to assess individual firms’ valuations, business prospects, and potential for share price appreciation. According to ETF Database, the strategy has outperformed XLK and the ETF Database Technology Equities Category average over one month and on a YTD basis as well. 

See more: Top Active ETF TCAF on Track for Major Milestone This Summer

Combined, these factors present a compelling case for TTEQ to replace or augment traditional tech-specific funds in portfolios. With its active flexibility and focus on technology beyond the limits of narrowly defined index categories, it may be a powerful tool for investors to fully benefit during an important tech earnings week.

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