Canadian investors generally have a more difficult time adding technology exposure to their portfolios than their global counterparts. There are a number of reasons for this.
Among these, the lack of Canadian options in the large cap, blue-chip technology sector continues to be problematic for those seeking decent risk-adjusted returns. In this article, I’m going to discuss one Exchange Traded Fund (ETF) that can help alleviate this issue for Canadian investors.
The TD Global Technology Leaders Index (TSX:TEC) holds a wide range of global technology leaders. This fund spreads out the concentration risk many Canada or U.S.-based funds would otherwise provide. By including various emerging markets and European players into the mix, North American investors can benefit from a wider degree of diversification and greater risk-adjusted returns over time.
My belief is that many investors do not truly understand how much concentration risk they hold as a result of a lack of diversification. Funds like these can really help to spread out one’s holdings in a cost-efficient way. Because this fund holds the largest tech companies in the world, various anti-trust issues and political risks will be more pronounced.
As with other investments that are more sensitive to events such as the upcoming U.S. election in November, I’d recommend being patient and buying the dips in November/December, should we see some materialize as I expect.
Invest wisely, my friends.
