Tech stocks remain a key space for investors, with the AI revolution driving continued success for AI-adjacent stocks. Investors have benefitted from that growth in recent years, but now that comes with concentration risk. The active tech ETF GTEK has produced robust numbers this year, outperforming big time tech ETFs like VGT without that concentration risk.
Key Takeaways:
- The active tech ETF GTEK has outperformed YTD, returning 56.6%.
- That has both outperformed big time tech ETFs like the Vanguard Information Technology Index Fund ETF (VGT).
- The fund, then, can provide a healthy option to reduce concentration risk and diversify portfolios.
The Goldman Sachs Future Tech Leaders Equity ETF (GTEK ) actively invests in tech firms with upside potential. So, rather than having the big Magnificent Seven names, or whichever acronym fits those huge firms, it has names with plenty of runway left to grow. What’s more, its active remit allows it to identify the strongest names and switch out of those companies whose outlooks may have cooled.
The fund charges a 75 basis point (bps) fee for that approach. Specifically, the fund uses an active, bottom-up approach. The fund only invests in companies with less than $100 billion in market cap. Intriguingly, it can invest in tech-enabled companies in areas like healthcare and direct marketing retail, as well. Its managers use fundamental metrics to screen for growth and quality, too.
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Together, that has helped the active tech ETF produce some strong performances. GTEK has returned 83.4% over the last twelve months according to ETF Database data. That has significantly outperformed the ETF Database Technology Equities category average in that time. The average comes in at just 50.2% as of June 23rd.
On a YTD basis, GTEK has returned 56.6%, as well. That has outperformed the average in that time frame too. It has also outperformed the Vanguard Information Technology Index Fund ETF (VGT) YTD. VGT has returned 23.76% YTD compared to GTEK’s 56.6% return.
Overall, then, the fund presents a case for consideration as a portfolio’s tech allocation. For those who want to invest in innovation without adding to megacap concentration risk, GTEK provides a robust, high performance option.
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