Facebook Slump Drags Down Tech ETFs: Any Winners?

Additionally, the twin tailwinds of Trump’s tax reform plan and a rising interest rate scenario are pushing the stocks higher. Most of the tech titans hoard huge cash overseas and are poised to benefit the most from reduced tax rates. They are also sitting on a huge cash pile and in a position to increase payouts to their shareholders. The cash reserves will ensure that these companies are not plagued by financial woes in a rising interest rate environment.

Adding to the strength is a pickup in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle.

Moreover, ETFs have huge diversification benefits as these have spread out exposure to a number of firms in various types of industries and can easily counter shocks from some of the industry’s biggest components.

ETF Winners

Tech ETFs with no or meager exposure to Facebook easily survived the rout. Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report), offering exposure to a small-cap segment of the technology sector, gained 0.7% while AdvisorShares New Tech and Media ETF (FNG - Free Report) that offers exposure to the high-performing technology and media leaders, popularly characterized as FANG was up 0.05%. Invesco DWA Technology Momentum ETF (PTF - Free Report) , which targets companies that show relative strength (momentum), lost 0.03%. The trio does not have Facebook in its roster.

Both First Trust Technology AlphaDEX Fund (FXL - Free Report) and Invesco S&P 500 Equal Weight Technology ETF (RYT - Free Report) with 1.6% exposure in Facebook added 0.2% each.

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