Should I Choose Active or Passive for Tech Exposure?

Should investors seeking to add technology exposure to their portfolios therefore invest via a passive instrument that tracks a technology benchmark? 

Samuel Meakin 5 August, 2015 | 3:30PM

Technology stocks have outperformed global stock markets over one, three, five and 10 years, beating both the MSCI World and the MSCI ACWI indices across each of those time periods.

But the average fund in the Morningstar Sector Equity Technology category has underperformed the MSCI ACWI Information Technology index over one, three, five and ten years, making manager selection particularly important for fund investors in the technology sector.

Active vs Passive for Tech Exposure

Should investors seeking to add technology exposure to their portfolios therefore invest via a passive instrument that tracks a technology benchmark? The popularity of technology as a theme has benefitted ETF providers with passive offerings in the sector. In 2014, despite overall outflows from active technology funds, technology ETFs saw net inflows over the course of the year.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Apple Inc317.94 USD0.00
GAM Star Technology USD Acc31.35 USD-0.67
Janus Henderson Hrzn Global Tech A2 USD108.24 USD0.13
Polar Capital Global Tech Inc66.61 USD-0.87

About Author

Samuel Meakin  is a fund analyst for Morningstar

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