The information technology sector with an exchange-traded fund of XLK has a positive third-party rating, which means that the investing parties have a positive perception of the commitment to this particular ETF. The European market is highly beneficial for XLK sector development, as some of the major industries tackled by the sector include software & IT, computers, phones, and household electronics (“XLK,” 2021). Hence, there is sector demand within the developed market. Various investment indexes indicate similar outcomes for the XLK weighting in the stock market, with S&P 500 and Fidelity claiming the need to hold the same amount of sector in one’s portfolio, whereas Ned Davis Research considers the possibility of increasing this amount.
In order to define what approach is more relevant, it is critical to look into the performance patterns of the sector over the past six months. Thus, it is evident that the overall progress of the XLK sector is positive, claiming an approximate 20% growth since March 2021. However, the last indicators are not promising and demonstrate either slow or no performance growth over the past month. For this reason, it may be advisable to observe the growth patterns for some time prior to holding larger XLK segments in one’s portfolio. The overall tendency of the XLK in the European market, however, remains positive and does not present a threat to the stock market due to the market relevance of top XLK holdings such as Apple Inc. and Microsoft Corporation (“XLK,” 2021).
References
S&P 500 technology sector SPDR (XLK). (2021). Barchart.
XLK. (2021). ETF.