Penn Wealth Publishing

2020.01.05 Penn Wealth Report Vol 8 Issue 01

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16 penn wealth Report volume 8 issue 01 05 Jan 2020 Penn Wealth Report Copyright 2020. All Rights Reserved. investment intelligence FTEC may look a bit rich with its 69 RSI rating, but we view it as a buy-and-hold. ETF Spotlight e One ETF to Own in 2020 You want to take advantage of advances in technology without taking on undue risk. We have the ETF for you. Talk about some powerhouse names. How would you like to own the likes of Apple AAPL , Microsoft MSFT , Visa V , Intel INTC , Broadcom AVGO , NVIDIA NVDA , and a slew of other top information technology stocks with one simple, low-cost investment? You can, with the Fidelity® MSCI Information Tech ETF (FTEC $69). And don't fool yourself into thinking that the likes of Visa, Mastercard MA , and PayPal PYPL (all holdings) aren't tech stocks, because they have all embraced technology in an effort to reshape their respective industries. What about the advent of fintech (financial tech- nology), which has promised to reshape the financial management landscape? e top publicly-traded fintech firms can be found in this fund—to include, somewhat ironically, the fund's namesake Fidelity National Information Services Inc FIS . We created this report using the global bench- mark in digital publishing software, Adobe InDesign, which is part of the massively popular and reve- nue-generating powerhouse Creative Cloud by Adobe ADBE —also in the fund. We are being just a big facetious when we say that the Fidelity Information Tech ETF is almost a port- folio unto itself. It could certainly fill an investor's needs for the Information Technology sector—with no supporting cast required. e icing on the cake? e fund costs just eight basis points to own. at is less than one-tenth of 1%. Pretty remarkable. Fund characteristics. While the weighted average market cap of the holdings in this fund is a hefty $462 billion, approx- imately 10% of the holdings are mid-caps, and 5% have market caps of $2 billion or less. While the fund works within the constraints of the Information Technology sector, it has tremendous industry breadth: • Sofware: 31% • IT Services: 22% • Tech Hardware, Storage, Peripherals: 20% • Semiconductors & Related Equipment: 18% • Communications Equipment: 5% • Electronic Equipment & Components: 4% As an ETF (as opposed to an open-end mutual fund), FTEC is fully liquid and can be traded intraday. In other words, a stop-loss could be placed on the position to protect gains or limit losses. As we said, however, we consider this fund a long-term holding. Obviously, after the year we had in the tech- heavy NASDAQ, we are cognizant of the fact that valuations are high, and it wouldn't take much for a temporary pullback. But that is what we believe it will be—temporary. Unlike the companies caught up in the tech bubble burst of 2000-2002, like AOL, Worldcom, Lucent, and (yikes) Pets.com, the top holdings in FTEC aren't going anywhere. As of the end of 2019, the top five holdings were: Apple, Microsoft, Visa, Mastercard, and Intel. Driving the future of America's economy. One of the most transformational devel- opments we see on the horizon, as we have pointed out ad nauseum, is 5G. We believe most Americans don't understand how radically this technology will change the way we live and work in a truly "con- nected" world. is fund read's like a who's who of notable 5G leaders. Yet another reason we call it a buy-and-hold investment. While we are heavy on cash going into 2020 and overweighting defensives, such as utilities and healthcare, if we could only own one tech holding, this is it. e contents of this report reflect the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guar- antees can be made and the firm is not liable for any losses incurred by subscrib- ers. is is not a solicitation to buy. Always consult your investment professional before investing any money. FTEC @ $69

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