This Active Tech ETF is Red Hot Despite AI Bubble Concerns

Despite AI bubble concerns and geopolitical issues, the S&P 500 has managed to return to positive performance YTD after a conflict-related drop. Tech remains a key part of that story even as headlines about AI valuations abound. Despite these concerns, the active tech ETF GTEK has distinguished itself by investing in innovative firms rather than relying on AI hyperscalers.

Key Takeaways

• Tech investing offers huge potential, but doubts about AI persist.
• The right active tech ETF can balance AI exposures with the type of innovators that investors crave.
• GTEK has done just that YTD and over longer time frames with its bottom-up approach.

The Goldman Sachs Future Tech Leaders Equity ETF (GTEK), will celebrate its fifth anniversary of operation this year. The strategy charges a 75 basis point fee to actively invest in key, growing tech innovators from around the world. 

The active tech ETF applies a bottom-up approach, looking to build a high-conviction portfolio. Its managers look for disruptors, purposefully excluding mega-cap tech names that have done most of their growth. It concentrates on information tech but can also invest in leaders in communications, healthcare, and other key sectors. Managers screen for quality and growth using fundamentals like free cash flow. These metrics help them target specific, high-conviction investments.

The strategy has helped GTEK to significantly outperform not only over the last month and YTD, but also over the last year and three year periods. The fund has returned 17% YTD, according to ETF Database data. It significantly outperformed the ETF Database Technology Equities Category average, which sat at just 3.61% over the same period.

What more, is that even as the average actually dipped negative over the last three months amid broader concerns about geopolitical risk and energy, GTEK continued to significantly outperform. Its top holding by weight, Delta Electronics (2308) has returned a robust 79.4% YTD. The company’s strategic focus on data center infrastructure is one example that tech opportunities exist beyond AI hyperscalers.

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Together, the active tech ETF could make for a strong satellite option to juice tech allocations in portfolios. With its active, bottom-up approach, GTEK provides an appealing combination of flexibility and fundamental basis that could make it a powerful option this year.

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