LONDON (Reuters) – Passive investors cautiously returned to investing in some index-tracking technology funds in latest week after pulling out more than a billion dollars as rising uncertainty around the outcome of U.S. elections curbed summer-like optimism.
Tech-focused ETFs have been the backbone of the Nasdaq’s rally this year with investors pouring in a record $16.7 billion this summer buying into high-flying U.S. mega cap tech firms.
But with the tech-heavy Nasdaq 100 <.ndx> down more than 6% from an early September peak after a record 84% rally off March lows, investors are worrying the reversal could gather steam with only a month left for U.S. elections.
In the week ending Sept. 30, tech-focused ETFs saw $463 million worth of inflows but a four-week moving average saw $165 million of outflows, the biggest since October 2019, according to Refintiv Lipper data.
Making up around a third of the benchmark S&P 500 index <.spx>, U.S. tech stocks have been the ultimate pandemic beneficiaries, especially so-called FANGMAN – Facebook, Apple, Netflix, Google, Microsoft, Amazon and chipmaker Nvidia.
Valuations are hovering near 27 times forward earnings for the S&P 500 index, the highest since the dotcom bubble in early 2000. Multiples of some tech stocks are as high as 100 times forward earnings.
(Graphic: https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrmddgpe/tech%20ETFs.png)
(Reporting by Saikat Chatterjee; editing by Thyagaraju Adinarayan)
