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  5. IYW: Hello I am underweight in tech, overweight in Financials and have a few stocks under 1% in the portfolio. [iShares U.S. Technology ETF]
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Investment Q&A

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Q: Hello

I am underweight in tech, overweight in Financials and have a few stocks under 1% in the portfolio. I am low on my US holdings

Thinking of future 5 years.

Sell NVEI, MU and TSU and buy IYW.

Your comments or suggestions most welcome.

Thank you

Mike



Asked by Mike on July 05, 2022
5i Research Answer:

On a long-term basis (5+ years) we would be comfortable owning all three of these names, but of course a diversified large-cap tech ETF such as IYW will provide a greater sense of security. We like MU but feel that it is not nearly as strong as the top names from the IYW holdings. NVEI and TSU are also not as battle-tested or solid as the holdings from IYW, but provide their own set of strengths, such as great valuations and stronger growth profiles than the large-cap tech names. 

While we cannot personalize answers, the tradeoff of 'swapping' NVEI, MU, and TSU for IYW comes down to risk/reward. NVEI is slightly cheaper than a large-cap tech name such as GOOG (one of IYW's top holdings), but NVEI has a much stronger growth profile, but at the cost of longevity uncertainty. With the expectations of lower returns but a safer risk-profile, we would be fine swapping NVEI, MU, and TSU for IYW.