Is US tech worth it?

hexavest funds management Jean-Pierre Couture Eaton Vance FE Analytics data Nasdaq s&p 500 technology US equities US global equities

21 May 2019
| By Laura Dew |
image
image
expand image

Hexavest is standing by its decision of being underweight US technology stocks, in the belief the companies are failing to live up to expectations.

The firm, a subsidiary of asset manager Eaton Vance, said prices for tech stocks were at the similar level to during the technology boom at the turn of the millennium. However, they were not reporting the similar booms in growth that they did at the time.

Hexavest chief economist, Jean-Pierre Couture, said: “We are underweight US technology stocks due to the valuation sentiment. The stocks are as expensive now as they were in the dotcom bubble but they are not growing that much faster than other sectors and are not outgrowing the wider index either.

“These companies such as Facebook are structural growth but remain cyclical, they rely on advertising and if the economy is slowing then discretionary spending such as advertising is going to slow down too and we think this will happen.”

The S&P 500 returned 17 per cent over the past year to 20 May, according to FE Analytics, and the tech-heavy Nasdaq returned 20 per cent, but individual stocks such as Facebook and Apple returned less than one per cent over the same period.

Couture said the trade was difficult for the firm but it remained convinced of having the trade in the its portfolios.

“Being underweight US technology has been a difficult trade but our level of confidence is actually getting stronger as we see weaker economic growth coming through from the US,” Couture commented.

Although the team were underweight US tech, they did not dislike the whole sector and were overweight companies in Asia such as Tencent and Alibaba.

Read more about:

AUTHOR

Recommended for you

 
sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

 

MARKET INSIGHTS

JOHN GILLIES

tHOSE 989 WHO ARE CEASED WILL GO ON TO LIVE A LONG AND HEALTHY LIFE JG...

2 days ago
Chris Cornish

What a sticth-up. Looks like Labor Senator Jess Walsh follows Stephen Jones who follows what the industry super funds ...

1 day 21 hours ago
Peter Swan

This report is a blatant display of far-left factional partisanship, treating superannuation funds as state property and...

1 day 22 hours ago

ASIC has cancelled the AFS licence of a Sydney wealth firm, the fifth Sydney firm to see a cancellation since the start of the year....

2 weeks 3 days ago

More than 20 winners from the funds management industry have been crowned at this year’s awards....

1 week 3 days ago

ASIC has obtained interim orders from the Federal Court to freeze the assets of a registered managed fund and prevent its former director from leaving Australia. ...

3 days 21 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND