And perhaps that headline could read – do you have enough growth in your portfolio? Of course tech is where they keep much of the growth these days. And certainly those tech companies have been driving the returns of the S&P 500 and other US stock index funds. For investors who create their own stock portfolio, it’s a reasonable question to ask. 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.
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 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.
More Weekend Reads.
Mark covers off some interesting topics in his Weekend Reads post. Mark touches on the Canadian REIT sector. Of course we are rewriting the rules for REITs perhaps with the stay at home and work at home economy. Some REITs are getting crushed. Others might prosper or hold up quite well.
On the REIT front I was pleased to find this YouTube presentation on RioCan. Young Griffin does a wonderful job of looking over a financial report. He makes it easy to understand, and it’s a very good video presentation. Teachers should give this one a watch.
That’s one big juicy yield. Griffin explains how it is currently covered from free cash flow -FFO.
For more on REITs here are a couple of ideas from Mike The Dividend Guy.
And on MoneySense this week I looked at the mounting Canadian debts and deficits. Who the heck is going to pay for all of this? Tax hikes are most certainly on the way. Should we be prepared to take any action? What about advisors and financial planners? Also in that post – will a vaccine bail out the stock market bulls?
And also on MoneySense from Renee Sylvestre-Williams how to pandemic-proof your paycheque.
On the real estate front Ellen Roseman offers how you can beware the penalties if you are going to break your mortgage.
FiPhysician looks at the retirement situation for US doctors. I was fascinated by the lack of wealth generation by a large segment of that population.
On The Snowman’s Guide – Am I ready to retire?
Here’s an interesting post on Vanguard clients who went all to cash in the crash. There were more women who made that move. Very surprising.
The US retail recovery.
To take the pulse of economic recovery in the US here’s the US retail sales report.
And on this side of the border here’s a recent report for your future pension – the Canada Pension Plan quarterly results.
Pigs fly – Buffett buys gold.
Warren Buffett has been on record that he thinks gold is not an investment. It does not earn anything or pay anything. But here we are …
Berkshire bought a small stake in that Canadian company. And it was likely not Mr. Buffett doing the buying, but one of his lieutenants. We’ll be on the lookout for the full report on this move.
Thanks for reading. Remember if you feel you do no have enough tech in your portfolio you can add by way of ETFs. BMO has the Nasdaq 100 for US and Canadian dollar accounts. There is also a Canadian dollar currency hedged version.
For Canada, you might have a look at iShares capped technology fund.
Canada’s top-ranked discount brokerage.
Cut The Crap Investing readers can sign up with Questrade (Canada’s top-ranked discount brokerage) through this partnership link. You can buy ETFs for free.
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