The financial crisis of 2008/2009 and the subsequent recession forced corporations to slash their technology spending. However, over the last three years, technology spending has been rebounding.
In a recent report on the Technology sector, Fidelity noted that tech companies focusing on services, Internet and software that can meet consumer demand for Internet services and e-commerce support should continue are expected to see revenue growth. Further the Fidelity report notes that these companies are likely to benefit from the popularity of social media and mobile communications. Fidelity expects technology spending in corporate, which is most important end market for technology companies, to remain steady in the megatrend areas of cloud computing.
Given the robust outlook for the technology sector, investors should consider including technology focused ETFs in their portfolio. The iShares S&P/TSX Capped Information Technology Index ETF (TSX: XIT) is one such ETF.
The fund invests in shares of the companies that make up the S&P/TSX Canadian Information Technology Index in the same proportion as they are reflected in the index. The fund’s top holdings include CGI Group Inc. (TSX: GIB.A) and Constellation Software Inc. (TSX: CSU). Over the last five years, XIT has returned more than 54%.
