CNN —While many on Wall Street have chased the monster rally in mega-cap tech stocks this year, exchange-traded fund (ETF) investors seem to be bucking the “all-in on tech stocks” trend and opting for a more diversified strategy.
The Nasdaq Composite index has climbed about 31% for the year, powered by a handful of tech stocks that have soared on hype surrounding artificial intelligence.
The Vanguard Information Technology Index Fund saw $955 million of net outflows in the first half of 2023 compared to $291 million net inflows in the first half of last year.
Investors had piled into tech-focused ETFs last year when the sector had fallen out of favor, betting that tech stocks would recover, buoyed by an economy that remains resilient despite the Federal Reserve’s punishing pace of interest rate hikes.
Now, investors are exiting these ETFs and reallocating their cash to quality stocks with strong balance sheets that can withstand a potential economic downturn, says Todd Rosenbluth, head of research at VettaFi.
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