XLK: Technology Stocks Are Worth Holding Into 2022
Summary
- Technology stocks continue to perform well, and valuations are arguably not especially high due to high growth and returns on equity.
- However, XLK's concentrated portfolio is now running above trend, and so forward returns are likely going to be much more limited as compared to the recent past.
- Nevertheless, holding XLK makes sense, although alternative funds such as QQQ are possibly better positioned in the long term.
- If XLK continues to breach its long-term trend rate of growth, it may be worth revisiting as we head into 2022. Yet for now, while sentiment remains strong, I would argue we are not yet seeing excess.
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