Tech Stocks for Value Hounds
The sector isn't just for growth managers.
The tech sector isn't the exclusive domain of growth managers--the S&P 500 sports a 20% stake, after all--but relative to their blend and value counterparts, it is a favorite growth fishing hole. Growth funds are the biggest shareholders of bellwethers such as Apple (AAPL) and Google (GOOG), and the bulk of holdings in Technology Select Sector SPDR (XLK), an exchange-traded fund that carves out the S&P 500's tech and telecom components, lands in the growth column of the equity style box. The typical fund in Morningstar's growth peer groups has over a fourth of its assets (26.4%) in tech stocks.
Apple's recent evolution from R&D-focused cash-hoarder to modest dividend-payer, however, coincides with increased tech exposure among blend and, especially, value funds. Across Morningstar's value categories, the typical fund has allocated roughly 12% of assets to technology companies. That more than doubles the figure from five years ago (5.5%) and comes close to doubling the percentage from 10 years ago (6.1%). The increase has been especially pronounced among small- and large-value funds. For that subset, the five-and 10-year average tech exposures are 3.4% and 4.4%, respectively.
Shannon Zimmerman has a position in the following securities mentioned above: OAKLX. Find out about Morningstar’s editorial policies.