The tech sector has demonstrated strength in the past two weeks, following the latest CPI release that showed inflation has eased by more than forecasted in October.
As a reminder, the October consumer price index rose 0.4% from the previous month, the Labor Department said in an economic news release on November 10. Notably, this was below economists’ expectations for an increase of 0.6%. Inflation rose 7.7% in October year over year — below projections for an increase of 7.9%.
Investors looking to reallocate funds to the technology sector should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT ), which is based on the S&P 500 Equal Weight Information Technology Index.
RYT is different from cap-weighted ETFs offering exposure to tech stocks, because its underlying index utilizes an equal-weight methodology, meaning that component companies receive equal allocations at each quarterly rebalance. This results in exposure that is considerably more balanced than other alternatives, and a methodology that some investors believe will add value over the long haul. An equal-weight approach is particularly impactful in the top-heavy tech sector, which is dominated by just a handful of names.
As of November 22, RYT has increased 10.0% in the past month compared to the S&P 500 Index’s increase of 6.9% during the same period, according to YCharts. Over a six-month period, RYT has slightly underperformed the S&P 500, both increasing 3.5%. RYT is still down -20.1% year to date, making now an optimal time to allocate for investors who expect a less hawkish Fed going forward.
The S&P 500 Equal Weight Information Technology Index covers the following industries: internet equipment, computers and peripherals, electronic equipment, office electronics and instruments, semiconductor equipment and products, diversified telecommunication services, and wireless telecommunication services.
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