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Bargain hunting drove investors to exchange-traded funds (ETFs) tracking technology companies after shares fell sharply on mixed earnings from heavyweights.

The iShares US Technology ETF (IYW-A), which has $11.2 billion in assets with Apple (AAPL-Q) and Microsoft (MSFT-Q) among its top holdings, saw net inflows of $694 million in the week ended Oct. 25, according to Lipper data, its best performance in over a year.

“Investors want large-cap tech exposure – whether that’s because they can handle higher rates better or simply because they’re more comfortable with those names in a really challenging macro environment,” said Todd Sohn, ETF and technical strategist at Strategas Securities.

The fund’s price fell nearly 4% in the week, as mixed results from megacaps like Alphabet weighed on the sector.

Despite potential short-term challenges, investors are starting to turn attention to 2024 where tech is expected to outperform, said Todd Rosenbluth, research head at VettaFi.

Tech-heavy Nasdaq gained 20% since the start of the year, supported by rallies in the “Magnificent 7″ tech stocks on optimism around artificial intelligence.

However, worries about higher-for-longer interest rates have stalled the momentum and set the benchmark on course for monthly losses.

Tech funds saw inflows of $2 billion in the week to Wednesday, their largest in eight weeks, according to BofA Global Research, which it attributed to investors “buying the dip.”

The $14 billion ProShares UltraPro QQQ (TQQQ-Q) posted net weekly inflows of $68.15 million, even as the price of the fund fell 9.5%.

“TQQQ is experiencing a surge in net flows as more aggressive retail traders seek to make big gains on hopes of a quick rebound,” Vanda Research’s analysts said in a note.

The $46.5 billion Technology Select Sector SPDR Fund (XLK-A) and the $9 billion VanEck Semiconductor ETF (SMH-Q) posted net inflows of $205.7 million and $280.6 million, respectively, for the week.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 21/02/24 4:00pm EST.

SymbolName% changeLast
US Technology Ishares ETF
Microsoft Corp
Apple Inc
Ultrapro QQQ 3X ETF
S&P 500 Technology Sector SPDR

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