This technology ETF was a better investment than the Nasdaq index – 05/29/2023 – From Grain to Grain

This technology ETF was a better investment than the Nasdaq index – 05/29/2023 – From Grain to Grain


When we think of investing in technology companies, the renowned technology exchange, called Nasdaq, soon comes to mind. The index that bears the name of the Exchange is made up of 100 companies, but not all of them are technology companies. Today I will address an international sectoral investment alternative.

That’s right. The Nasdaq 100 index has, among the companies that form it, companies from other sectors, in addition to technology. For example, Starbucks and Mondelez. The first is the coffee shop brand and the second is the food company responsible for major brands such as the Oreo cookie.

If you really want to focus on technology companies, one way is to invest in an exchange-traded fund, or ETF, of technology companies, for example the ones that make up the S&P500.

In fact, you can choose which sectors you want to invest in from the most followed American stock exchange, the S&P500.

The S&P500 is a broad index created in 1957 and made up of 500 companies, which together account for about 80% of market capitalization.

This index is made up of 11 sectors. I present these sectors in descending order of weight in the index: Information Technology, Health, Finance, Consumer discretionary, Industry, Communication services, Consumer goods, Energy, Public utilities, Materials and Real estate.

These 11 sectors are illustrated in the pie chart below with their respective weights.

Each of these sectors is made up of the companies in its respective sector in the S&P500. Thus, when we talk about the index formed by technology companies in the S&P500, unlike the Nasdaq index, there are only technology companies.

In 2023 and in the last five years, this technology index appreciated by 34.97% and 118.68%. The Nasdaq 100 index rose 31.73 and 94.81%, respectively.

Investment in each of these sectoral indices listed above can be made through an ETF that replicates it. The table below presents the code of each ETF and its valuation this year.

It is only possible to invest in these ETFs through brokers with global platforms. But this investment, too, has already been popularized. Unlike the past, it can be started with capital as low as R$500.00.

Realize that only 3 sectors of the American Stock Exchange have significantly positive valuation in 2023. Therefore, knowing how to choose the sector in which to invest can result in a large return differential.

Michael Viriato is an investment advisor and founding partner of Investor House.

Talk directly to me via email.

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