Hold XLK, but consider specific tech names for allocation

XLK, a tech ETF, is recommended as a holding but not the first allocation. The author prefers to focus on individual tech names rather than the theme. The ETF's screen doesn't accurately reflect the current market, and picking specific names is considered a better approach.

The Technology Select Sector SPDR Fund (Symbol: XLK) has experienced notable inflows, with an approximate $175.8 million dollar increase in outstanding units week-over-week [1]. This increase, representing a 0.2% rise, was driven by the performance of several key holdings, including Lam Research Corp (Symbol: LRCX), KLA Corp (Symbol: KLAC), and Analog Devices Inc (Symbol: ADI), which saw gains of about 1%, 0.2%, and 0.5% respectively [1].

The recent inflows into XLK can be attributed to the strong performance of its underlying components, particularly in the technology sector. The fund's holdings have shown resilience, with the 52-week range for XLK's share price being $172.45 to $252.52, and the most recent trade price at $252.19 [1]. This performance aligns with the broader tech sector's growth, driven by the increasing demand for semiconductors and other high-tech components.

However, the author of the article prefers to focus on individual tech names rather than the theme-based ETFs like XLK. The author believes that picking specific names can provide better returns and a more tailored investment strategy. This approach is supported by the success of individual tech stocks, such as Microsoft, Nvidia, and Amazon, which have driven the performance of the Invesco QQQ Trust (NASDAQ: QQQ) over the past decade [2]. The QQQ has compounded investor capital by more than fivefold, driven by the success of these dominant companies.

Despite the strong performance of XLK, the author advises caution. The ETF's screen may not accurately reflect the current market, and it is essential to consider individual names for a more precise investment approach. The author also recommends being prepared for lower returns in the future, given the potential for higher interest rates and economic uncertainty [2].

In conclusion, while the Technology Select Sector SPDR Fund (XLK) has seen significant inflows and its holdings have performed well, the author suggests a more tailored investment strategy focusing on individual tech names. This approach can provide better returns and a more accurate reflection of the current market.

References:
[1] https://www.nasdaq.com/articles/noteworthy-etf-inflows-xlk-lrcx-klac-adi
[2] https://finance.yahoo.com/news/best-tech-etf-invest-2-083000936.html