No-tech ETFs?

I'm looking to invest in ETFs (obligatory disclaimer: I'm aware of and comfortable with the tax situation). I was looking at ETFs tracking the MCSI World index (I've actually already bought a small amount to see how I feel about the value going up and down), but one thing that gives me pause is that roughly 20% of the index is tech. I work in tech, and have RSUs in my employer, so I'm already very exposed to it. Ideally, I'd like to avoid yet more exposure.

Is there a sensible way to invest in, more or less, "the market except for one sector"? The only way I've been able to find is to buy a bunch of smaller sectoral ETFs, but that comes with its own problems. Or am I completely overthinking this?

https://www.nasdaq.com/articles/2-etfs-for-equities-exposure-with-or-without-tech

That’s a US-domiciled ETF.

I’m not aware of any EU-domiciled equivalent.

Yup, SPXT looks approximately like what I was thinking of, except, as you say, it's not EU-domiciled. Though I think its definition of 'technology' may be a bit weird; its largest holdings include Amazon, Facebook and Alphabet (Google). (You could argue that these are more consumer companies than tech companies, but ultimately if there's a big tech downturn they'll probably suffer, too).

My brother has a large exposure to tech so his adviser built him a bespoke pension portfolio without as much tech exposure. It’s direct equities though.

I guess you could underweight tech by overweighting your exposure to European equities.

Also, you could build a portfolio of sector ETFs other than tech (ie consumer staples, utilities, financials, etc) roughly in line with their weighting (ex-tech) in a global index.

Unnecessarily complicated, IMO, but it should be possible.

I think you’d be better just parking your concerns and taking the global exposure.

If 20% of this new portfolio was going to be in the same company you work for, I’d be worried, but tech is so broad and there’s also lots of potential upside as well as potential downside from the sector.

For example, if I worked for Microsoft and had $1m worth of MS stock, I would still want exposure to other technology companies in my portfolio. I’d want diversification in that sector.

You could very well jump through loads of hoops to avoid 20% technology exposure in this new portfolio and regret it down the line (but of course the opposite could transpire).

Personally, I’d want some exposure to AI, microchips, emerging technology etc.

Don’t tie yourself up in knots and just take the exposure would be my advice. But cash in the shares in your employer and diversify as you go.

Hmm5673 said:

I'm looking to invest in ETFs (obligatory disclaimer: I'm aware of and comfortable with the tax situation). I was looking at ETFs tracking the MCSI World index (I've actually already bought a small amount to see how I feel about the value going up and down), but one thing that gives me pause is that roughly 20% of the index is tech. I work in tech, and have RSUs in my employer, so I'm already very exposed to it. Ideally, I'd like to avoid yet more exposure.

Is there a sensible way to invest in, more or less, "the market except for one sector"? The only way I've been able to find is to buy a bunch of smaller sectoral ETFs, but that comes with its own problems. Or am I completely overthinking this?

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Sell your RSUs when they vest and invest in an index. That way your income and your wealth aren't tied to the one company. That is a lot riskier than having 20% of an index invested in a range of different tech companies.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)