It appears most ETF investors aren’t cashing out of technology despite this year’s painful losses.
Invesco’s Anna Paglia lists a reason: Investors are more loyal to the idea of growth than to the market’s near-term swings.
“You do not assess the growth of companies based on what’s happening today, [and] what’s going to happen next month,” the firm’s global head of ETFs and indexed strategies told CNBC’s “ETF Edge” last week. “You assess growth based on what you think is going to happen in five years or 10 years.”
The Nasdaq rallied almost 3% on Friday — climbing more than 2% for the week during a heavy part of earnings season. The tech-heavy index staged a comeback despite Amazon‘s rough performance following Thursday’s quarterly earnings and guidance.
The Nasdaq is still almost 32% from its record high hit last November.
VettaFi’s Dave Nadig believes future growth prospectics are keeping investors interested. The short and leveraged QQQs in the ETF space have been “stalwarts for volume” ever since launching, according to Nadig.
“We can turn to the QQQ as a perfect example here. The people who are trading short Qs and leverage Qs are not doing that because they’re looking for a more efficient beta for their retirement plan. They’re doing that because they’re making a call in tech,” the firm’s financial futurist said.