Investment funds and ETFs, which allow risk diversification, are the most interesting ways to bet on a winning sector in the post-Covid era.
Nothing seems capable of contesting the reign of the technology sector on the Stock Market. The Euro Stoxx 600 industry index rose yesterday alone, at 1.51%, spurred by SAP’s 4.58% rise. The indicator climbed 3.3% at the best time of the day and SAP, 8.5%.
The German software multinational, the largest European technology company by capitalization (€ 165,454 million), posted better-than-expected second-quarter revenue, thanks to the recovery in demand in Asia. This is a good sign that abounds in the idea that the diverse technology sector, which had already been on the wind for years, is called to be the winning horse in the post-Covid era.
On the other side of the Atlantic, Apple, Microsoft, Amazon, Facebook and Netflix exhibited muscle before investors, setting new record highs, a move that was key to spur al Nasdaq that closed one more day at highs against the correction that dominated the session. for the rest of the US indices.
Experts largely argue that the bullish adventure in the tech sector is far from over. The coronavirus pandemic has changed two key aspects of daily life. Teleworking and virtual social relations have been imposed. “In both cases, technology, and especially software companies, play a fundamental role, which is not specific, but is here to stay,” Bankinter analysts explain. “It has opened a path and will not lose it. It will continue to gain ground in traditional businesses,” adds Jorge Lage, from CMCapital Markets.
Gisela Turazzini, of Blackbird Bank, assures that the American technology giants “are technically overbought, in a phase of expansion of the trend and expensive. In these cases, the recommendation is usually to maintain, since when the current rally ends, the prices should correct , either in time or volatility. ”
Analysts in the Bloomberg consensus, however, continue to see potential. Many are running after prices. For example, at Apple, which closed the session yesterday at 382.73 euros, at least three firms have raised the target price to 400 euros this week.
In any case, the direct purchase of shares is not the most recommended option for retail investors interested in making room for the technology sector in their equity portfolios. “It is a very complex and changing sector. There is no point in gambling with 2, 3 or 4 companies,” says Lage.
Investment funds or ETFs are more advisable formulas because they allow risks to be diversified. The most profitable technology fund of the year, according to Morningstar, is the BGF Nex Generation Technology Fund X2 USD, with 47.69%.
José María Luna, of Luna Sevilla Asociados, advises the Fidelity Global Technology A-Dis-Eur and the BGF World Technology A2 Eur. Guillermo Santos, of iCapital, leans towards the fund of large companies T Rowe Price global Technology, which raises a 31.5% for the year, and the Alger Small Cap Focus Fund, which earns 24%, to focus on small businesses.