Information Technology Sector Funds
Tech has been a big disappointment in 2013. The sector has generated a total return of 15%, lagging the S&P 500 by 8 painful percentage points. But there is hope for a strong finish into the end of the year and beyond.
Like consumer discretionary stocks, there’s a lot of pent-up demand, as corporations have put off business investment in infotech. That’s starting to change, as companies need greater efficiency to enjoy record-high margins. Cash-rich balance sheets also bode well for dividends and mergers and acquisitions.
Top Sector ETF — Vanguard Information Technology ETF (VGT): Another way to get cheap exposure to the “Admiral” share class of an excellent Vanguard fund. Top holdings include Apple (AAPL) and Google (GOOG), and the price is right. Expenses come to just 0.14%.
Top Sector Mutual Fund — ProFunds Internet UltraSector (INPSX): Top holdings also include Apple and Google, as well as eBay (EBAY) and Priceline.com (PCLN). Expenses of 2.84% would ordinarily make this fund a non-starter, but active management is more than earning it keeps. The fund is beating the S&P 500 by 34 percentage points for the year-to-date.