Cheap Historical Valuations Suggest Stock Deals

Since ending the first half of 2022 with the worst returns in over 50 years, stocks staged another recovery last week, with the growthiest parts of the market seeing notable momentum. Inflation and recession fears have dominated in recent weeks. However, a new narrative is emerging as investors wonder whether it’s time to start buying up stocks again, citing cheap historical valuations.

With the U.S. dollar breaking out to highs not seen since the early 2000s, imported inflation may cool for many growth and technology companies that source their product components from overseas manufacturers, according to ALPS.

Investors looking to reallocate funds to the space should consider the Invesco S&P 500 Equal Weight Technology ETF (RYT A-), which offers exposure to equities included in the S&P 500 Information Technology Index, including 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, according to VettaFi.

RYT is different from other ETFs tracking the same index because it employs a unique equal-weighted strategy, meaning that component companies receive approximately equal allocations. 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.

Equal weighting can provide diversification benefits and reduce concentration risk. This is particularly impactful in the technology sector as a small number of mega-cap funds can have an outsized impact on a market-cap weighted fund.  

The fund comprises 77 securities, 91.26% of which are large-cap companies and 8.74% are mid-cap companies.

RYT charges a 40 basis point expense ratio and has $2 billion in assets under management. 

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