EquitiesJul 14 2022

What role do tech stocks play in a US equities portfolio?

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Supported by
DO NOT USE T Rowe Price
What role do tech stocks play in a US equities portfolio?
(Michael Nagle/Bloomberg)

“For example, Cadence and Autodesk both have similar business models, offering specialised, mission critical software solutions for their respective industries. However, both companies have quite distinctive underlying growth drivers.

“Cadence is driven significantly by R&D spend within semiconductor development, which continues to grow at attractive rates, whereas Autodesk benefits primarily from the digitalisation of the architectural design and construction processes.”

Although tech stocks are unlikely to get the valuations they did during the pandemic-driven market backdrop anytime soon, Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, adds that long-term economic growth will likely be driven from productivity rather than population growth.

“Productivity is created when goods are produced and services are provided in faster, cheaper and less resource-intensive ways. Automation and robotics are likely to be increasingly important to global economic growth.

"In our view, technology earnings growth is to keep up with or even outpace overall earnings growth, as technology is an important driver of productivity enhancements.”

Chloe Cheung is a senior features writer at FTAdviser

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