The market in 2022 has not been kind to investors in general, but it has been especially tough on tech stock investors. As can be seen, high inflation and rising interest rates still tend to increase people’s interest Fast income Instead of the fast long-term growth potential that tech stocks typically offer.
Those trends are likely to continue, with Federal Reserve Chairman Powell making clear that he intends to remain aggressive in his fight against inflation. In that context, it’s easy to feel like you’ve been burned by your tech stock investments. While it’s hard to deny the incredible impact tech companies have on our lives and economy, you might want to try these three ETFs instead of waiting. all of them Put your money in technology.
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Number 1: A less tech-heavy way to invest in the S&P 500
Common S&P 500 Index funds are weighted by market-cap, which means that large companies have a greater influence on the fund. The challenge is that a handful of technology-focused individuals dominate the fund. In fact, 25% of S&P 500 index funds are made up of tech stocks.
of Invesco S&P 500 Equal Weight ETF (Rsp -3.22%) It still buys stocks in the same 500 companies as most S&P 500 funds. Instead of holding each stock in proportion to their market capitalization, the Invesco S&P 500 Equal Weight ETF tries to keep the same dollar amount invested in each trade. That structure means 15% of the fund’s holdings are in technology stocks, reducing the fund’s 40% exposure to the sector.
That weighting of similar companies makes this ETF a reasonable choice for investors who still want index benefits without focusing on technology. No, you can’t. completely Get out of technology by choosing the Invesco S&P 500 Equal Weight ETF, but stay directly connected to it.
Number 2: Think of an important industry that doesn’t match current politics
Like it or not, the world runs on oil and natural gas, and even the US Energy Information Agency expects their use to continue to grow for decades to come. In that world, the Global X MLP and Energy Infrastructure ETF (MLPX -1.54%) Although a non-profit industry can be an attractive option for those looking for income.
Global X MLPs and Energy Infrastructure ETFs typically invest in general equity securities of pipelines and other mid-cap energy businesses. Those types of companies tend to generate money in any economy because they are in the business of moving energy from where it is produced to where it is produced and processed.
Importantly, pipelines are one of the most cost-effective ways to move that type of energy. This would help with a recession if energy demand were to drop, as more expensive forms of energy transportation would be shut down before pipeline-connected transportation.
The current political unpopularity of fossil fuels makes the Global X MLP and Energy Infrastructure ETF unlikely to see much going forward. development In the near future. Still, with yields approaching 5% and an industry that will remain in demand for decades to come, there may be room for pipeline in your portfolio.
Number 3: Look for durable, decent quality products
of Vanguard High Dividend Yield Index ETF (V.M -2.60%) It invests in US companies that pay good dividends and look set to continue that trend. Because technology stocks are not among the top yielders, the fund’s component holdings make up just 8 percent.
Despite the fund’s name, the current yield is only around 3% — decent, but clearly not looking for maximum yield. This is important because when the company’s product as well as Higher, usually a sign that the dividend is in danger of being cut. The index that the Vanguard High Dividend Yield Index ETF tracks does not specifically include companies that closely resemble their shares, which helps provide some protection against this risk.
The fund is well positioned through 2022, losing significantly less than the broader S&P 500 index. Given the current economic climate, that makes sense as investors are looking for income. Of course, there are no guarantees that the future will pan out like the past, but as long as investors prioritize income over growth, this fund has a way of holding up well.
There is a whole market beyond clean technology.
The transformative power of technology is undeniable, and there is no question that technology plays a major role in our economy and our daily lives. Still, if you’re burning through 2022 with a very tech-heavy portfolio and want to diversify, these three ETFs are candidates to consider. Make today the day you plan to better balance your portfolio, and if the rest of 2022 is as tech-heavy as it started, you’ll be glad you did.
Chuck Saleta has no position in the stocks mentioned. He has positions in the Motley Fool and recommends the Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.
