PSCT: Own Large-Cap Tech Stocks Instead

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Jacob Wackerhausen ETF Overview Invesco S&P SmallCap Information Technology ETF (NASDAQ:PSCT) owns a portfolio of 68 U.S. small-cap technology stocks. Given its exposure to the fast-growing technology...

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Given its exposure to the fast-growing technology...</p>\n\n<a href=\"https://seekingalpha.com/article/4696771-psct-own-large-cap-tech-stocks-instead\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>PSCT: Own Large-Cap Tech Stocks Instead</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPSCT: Own Large-Cap Tech Stocks Instead\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-01 00:21 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4696771-psct-own-large-cap-tech-stocks-instead><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Jacob Wackerhausen ETF Overview Invesco S&P SmallCap Information Technology ETF (NASDAQ:PSCT) owns a portfolio of 68 U.S. small-cap technology stocks. Given its exposure to the fast-growing technology...</p>\n\n<a href=\"https://seekingalpha.com/article/4696771-psct-own-large-cap-tech-stocks-instead\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://seekingalpha.com/article/4696771-psct-own-large-cap-tech-stocks-instead","article_id":"2440105049","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1552881556/image_1552881556.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2440105049","pubTimestamp":1717172509,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Jacob Wackerhausen ETF Overview Invesco S&P SmallCap Information Technology ETF (NASDAQ:PSCT) owns a portfolio of 68 U.S. small-cap technology stocks. Given its exposure to the fast-growing technology","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","BK4550":"红杉资本持仓","VIOO":"Vanguard S&P Small-Cap 600 ETF","FDN":"First Trust Dow Jones Internet I","VGT":"信息技术ETF-Vanguard","XLK":"高科技指数ETF-SPDR","PSCT":"小盘科技股ETF-PowerShares","BK4585":"ETF&股票定投概念"},"translate_title":"PSCT：转而持有大盘科技股","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PSCT":1,"VGT":1,"VIOO":1,"XLK":1,"FDN":0.9},"content_text":"Jacob Wackerhausen ETF Overview Invesco S&P SmallCap Information Technology ETF (NASDAQ:PSCT) owns a portfolio of 68 U.S. small-cap technology stocks. Given its exposure to the fast-growing technology industry, the fund has the potential to outperform other non-technology small-cap funds. However, PSCT will likely continue to underperform its larger-cap technology peer funds as: (1) small-cap technology names have higher rate of failure than large-cap stocks; (2) many successful startups will eventually become large-cap stocks and PSCT will not enjoy the full benefit of the growth of these stocks. The fund’s expense ratio of 0.29% is also higher than its large-cap technology peers. Hence, we think investors with a long-term investment horizon that wish to optimize their total returns should seek large-cap technology funds instead.   YCharts Fund Analysis Stock style of PSCT PSCT has a portfolio of 68 small-cap technology stocks. Therefore, it is not surprising that its stock style is in the bottom right of the stock style map (see below). However, as the chart below shows, PSCT is only slightly tilted towards growth. This is very different than other technology funds that are very growth oriented (see the top right corner of the chart). Although PSCT belongs to small-cap category, it is in the borderline between small-cap and micro-cap stocks. In contrast, most other technology funds belong to large-cap or mega-cap categories.   Morningstar PSCT should deliver strong growth relative to small-cap funds As we know, technology stocks have outperformed the broader market in the past few decades. This is indeed the case if we compare PSCT’s performance with the S&P 600 Index, which focuses on 600 small-cap stocks. Below is a chart that compares the performance of PSCT and Vanguard S&P Small-Cap 600 ETF (VIOO) in the past 10 years. As can be seen from the chart below, PSCT delivered a total return of 226.3% in the past 10 years. This was much better than VIOO’s total return of 129.1%.   YCharts Looking forward, we expect this outperformance to continue thanks to demand for technological services and products driven by important technological megatrends such as artificial intelligence, cloud computing, AR/VR, Internet of Things (IoTs), and industrial automation. This is indeed what other analysts think as well. As the table below shows, the consensus long-term earnings growth rate for stocks in PSCT’s portfolio is nearly 15%. In contrast, stocks in the S&P Small-Cap 600 index have an inferior average growth rate of 11.3%. Therefore, it is likely that PSCT will continue to outperform most other non-tech small-cap funds in the near future.     PSCT S&P Small-Cap 600 Index   Cash-Flow Growth 12.60% 8.82%   Long-Term Earnings Growth 14.99% 11.27%   Click to enlarge Source: Morningstar PSCT’s performance lagged its large-cap tech funds Now that we have shown that PSCT will likely outperform its non-tech small-cap peer funds, we will check to see whether it will outperform its large-cap technology peer funds as well. Below is a chart that compare PSCT’s total return with two large-cap technology ETFs: Technology Select SPDR ETF (XLK) and Vanguard Information Technology ETF (VGT). As can be seen from the chart below, PSCT’s total return in the past 10 years trailed VGT and XLK by a wide margin. Both VGT and XLK delivered a total return of about 550% in the past 10 years. In contrast, PSCT’s performance was only about half of what VGT and XLK delivered.   YCharts Why was there a big gap between PSCT and its large-cap technology peer funds in terms of performance? We think there are two reasons. First, many small-cap technology stocks are start-ups without proven business models. Therefore, the rate of failure can be higher than large-cap technology stocks. This higher rate of failure may hamper the returns in the long run. Second, those small-cap technology stocks that end up becoming successful companies will likely move on to become mid-cap or large-cap stocks. In other words, they will not stay in the small-cap category forever. Hence, PSCT will not be able to enjoy the full benefit of the growth of those technology stocks that eventually become large-cap stocks. Therefore, it is likely that PSCT will continue to lag XLK and VGT. Higher downside risk than other tech-cap funds Small-cap stocks can be quite volatile relative to large-cap stocks. Like large boats that can weather the storm better than small boats, large-cap stocks can typically perform better in market turmoil. This is because large-cap stocks have proven business models, and better balance sheets than small-cap stocks. Below is a chart that shows the downside risks of PSCT and its two large-cap technology peers. As can be seen from the chart below, PSCT has much higher downside risk than its large-cap peers in market turmoil. For example, in the recession caused by COVID-19 in March 2020, PSCT has fallen as much as 40% from the high. In contrast, its peers XLK and VGT only declined by about 30%. PSCT's higher magnitude of decline than its large-cap peers also happened in the corrections of late 2011 and 2019 as well.   YCharts PSCT’s expense ratio is also higher than its large-cap peers Another disadvantage of owning PSCT is its higher expense ratio. Its expense ratio of 0.29% is high among technology ETFs. Its large-cap peer funds such as XLK and VGT have expense ratios of 0.09% and 0.1% respectively. Investor Takeaway If your goal is to invest in the small-cap space, we think PSCT is a good fund relative to other non-tech small-cap funds. However, if your goal is to optimize your total return in the long run, large-cap technology funds are clearly better choices with lower risks.  Additional Disclosure: This is not financial advice and that all financial investments carry risks. Investors are expected to seek financial advice from professionals before making any investment.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440105049"}