(Harvest) With Apple finally having eclipsed the $1 trillion market cap threshold, and other companies also knocking at that door, an increasingly discussed topic among investors has been whether the narrowing of the recent rally to a handful of tech names is signaling the time to pare back exposure to the sector altogether. At WisdomTree, we recognize that history tends to repeat itself and investors must learn from past bubbles, such as the dot-com bubble , to steer clear of future ones. This is why we launched ourfundamentally weighted Indexes: to ensure that fundamentals, and not merely investor sentiment, drive index exposures. Many of today’s large tech companies are rewarding shareholders in the form of massive dividend and share buyback programs, earning their way into fundamentally weighted indexes. However, as has been highlighted by some of the tech-driven sell-offs of 2018, these companies are a disparate group, with vastly different fundamental and technical characteristics. A comparison of theWisdomTree U.S. Quality Dividend Growth Index and the S&P 500 Index helps illustrate the relative tech exposures and fundamentals that result from imposing a quality screen and dividend-weighting on large-cap U.S. equities.
How Much Does Your Portfolio Rely on Technology?
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