Tech ETFs Reach Over 50% Weight, Investors Seek Diversifier From Amazon-Heavy Funds
AMZN•Since the S&P 500 March 30 trough, technology ETFs have drawn the bulk of sector flows, with QQQM and IWF holdings exceeding 50% tech exposure. Traditional consumer discretionary ETFs remain dominated by Amazon and Tesla, driving investors toward Invesco Leisure & Entertainment PEJ for lower Amazon weighting.
1. Tech ETF Dominance
Since the S&P 500’s March 30 trough, technology sector ETFs have attracted the majority of flows, with Invesco Nasdaq 100 ETF (QQQM) and iShares Russell 1000 Growth ETF (IWF) both exceeding 50% technology allocation.
2. Hidden Tech Exposure in Factor Funds
Sector-neutral factor funds also carry significant tech exposure: the iShares MSCI USA Value Factor ETF (VLUE) and MSCI USA Momentum Factor ETF (MTUM) both approach 50% tech weight, MSCI USA Quality Factor ETF (QUAL) exceeds 33%, and MSCI Emerging Markets ETF (EEM) is over 40% tech.
3. Amazon Concentration in Discretionary ETFs
Traditional consumer discretionary ETFs face heavy concentration in Amazon and Tesla, with sector performance dominated by these names; equal-weight consumer discretionary’s six‐month relative return ranks in the bottom decile over the past two decades.
4. Diversification Alternatives and PEJ
Strategas highlights dividend, value and low‐volatility funds as low‐tech alternatives (e.g. SPLV, FDL, HDV, NOBL, RPV) while recommending Invesco Leisure & Entertainment ETF (PEJ) for direct exposure to travel, leisure and entertainment with lower Amazon weighting.
