Do you have enough tech in your portfolio?

For our accounts we use a mix of individual stocks and ETFs. But for the US allocation it’s all stocks. I had wondered if I was missing out. While I love my dividends and dividend growth, in the end it will all come down to total returns. The most optimal arrangement for retirement funding might be a nice mix of generous and growing dividends and that growth component. We can make our own home-made dividends.

Benchmarking our techs against the Nasdaq 100

I ran our tech basket of 4 companies against the Nasdaq 100. You can read about that exercise in my recent Seeking Alpha post. And yes, I’m going to give away the ending.

Here’s … My tech basket has more growth than the Nasdaq 100.

Apologies for the brag, but that’s how we do it on Seeking Alpha. 🙂

The 4 companies are Apple, Microsoft, Qualcomm and Texas Instruments. As you might expect the tech monsters of Apple and Microsoft are the main drivers of those returns. That said, the tech 4 does not keep up with the fabled FAANG stocks. The group includes Amazon, Netflix and Google (Alphabet) in addition to Apple and Microsoft.

That one ticket portfolio has you covered

If you hold a one ticket asset allocation portfolio, you’ve got tech. Those tech giants dominate the S&P 500 or US total market ETFs that are held by the one ticket ETFs. And in Canada Shopify holds the greatest weight in the TSX 60 or TSX composite ETFs. There are other Canadian tech companies contributing, but the US is certainly the land of tech giants and tech growth.

Tech is now 11.2% of the TSX 60 ETF.

Related post – Why index investing works.

The international funds hold some tech, but again it’s more muted. Here’s the allocation for a developed market index such as iShares XEF that you’ll find on the ETF Model Portfolio page.

Of course you’ll have some decent tech exposure if you are investing with one of the Canadian Robo Advisors that use a core couch potato approach.

Should you boost your tech weight?

You might choose to do so. You could do so by way of a few individual stock holdings. And I’ve long liked the idea of the Nasdaq 100 ETFs that are forward thinking and certainly offer more than tech stocks. I had suggested that holding in the new balanced portfolio.

And in that post I had mentioned that Horizons uses the Nasdaq 100 in their tax efficient one-ticket funds. Here’s the allocation for their HGRO ETF.

Of course in it’s short history that would be Canada’s best performing one-ticket offering.

Horizons’ approach has a host of benefits and advantages. I’ll detail that shortly in a dedicated post.

Many think that we’ll have a rotation away from tech with a move into more value oriented stocks and sectors. That said, here’s one of the more interesting posts and provocative themes I’ve seen this week, from Sparkline Capital …

Value investing is short disruption.

Value has been crushed. Maybe that will continue. Value has a lot of making up to do …

That is more than an interesting read. Maybe value has had its day? But on that, nobody knows the future.

“Growth is delivering. Tech and health care are the only two sectors offering year-on-year gains in second-quarter earnings,” Sam Stovall, chief investment strategist at CFRA Research, the New York-based investment research firm, said in an interview.