XLK: Concentrated Portfolio Reduces Its Appeal

Geoff Considine
5.7K Followers

Summary

  • XLK has performed very well in recent years.
  • This ETF has a 46% allocation to just 2 stocks: MSFT and AAPL.
  • The market-implied outlooks make XLK look less attractive than QQQ over the next year.
  • I am changing my rating on XLK to neutral because there are better ways to get technology exposure.

2022

Urupong/iStock via Getty Images

The Technology Sector SPDR, NYSEARCA:XLK, is composed of stocks in the S&P 500 that are classified as technology. This ETF is quite popular, with $48.5B in assets, albeit much smaller than QQQ, which has $194B in assets. It may be tempting to

This article was written by

5.7K Followers
Geoff has worked in quantitative finance for more than twenty years. Before entering finance, Geoff was a research scientist for NASA. Geoff holds a PhD in Atmospheric Science from the University of Colorado - Boulder and a BS in Physics from Georgia Tech. Neither Geoff Considine nor Quantext (Geoff's company) are investment advisors. Nothing in any commentary here on Seeking Alpha or elsewhere shall be regarded as advice.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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