Sector bet - Quo vadis?

or

Help, a sector ETF on getquin

Between the years is a very good time to think about your investment strategy. Surrounded by family, you can take a breather while the kid is still busy with way too many Christmas presents and you don't actually know what day of the week it is.

In the last post I already mentioned that the market situation has awakened in me the attraction to invest in individual stocks.

As this changes the structure and distribution in my portfolio, I've also been questioning my previous purchases, most notably the one mentioned above $2B76 (-0,48%).

A year ago, it was started to be parsed, as an individual note in a world portfolio that was too boring until then. As I said, I did not want and could not deal with individual stocks at that time.

At that time, this ETF contained values such as $NVDA (+2,32%)
$AMD (-2,45%)
$GRMN (+0,75%) and even $AAPL (+0,17%) were represented and appeared among the Top10 positions.

If you look at the Top10 positions today, they are no longer the ones mentioned, which are still included, but which you have to look for more closely. So something has changed in the included positions and their weighting.

The fact that I am $2B76 (-0,48%) in my portfolio with 15% in the minus, does not even bother. So it's not about selling due to panic at double-digit price losses, but to question one's own strategy and the fit of the existing values to it.

But what does the ETF actually do?

Automation & Robotics currently invests in 159 companies that develop technologies in the field of automation and robotics in industrialized and emerging countries. The automation of processes in industry, in the manufacture, storage and distribution of products, the use of robotics to supplement or replace humans in the above-mentioned areas is where I am active myself through my job and where I want to invest.

Launched in 2016 and since then it has delivered the following perfomances:

2017: +46,8%

2018: -18,3%

2019: +37,8%

2020: +38,8%

2021: +21,0%

2022: -30,27%

So performance is swinging out quite a bit, both up and down. An indication that if it went down strongly, it can also go up strongly again?

Sector bets are not really popular on getquin. So now settle the question: What to do with this thing?

What are the possibilities?

• Dissolve sector bet and split it into world and single stocks
• Leave the sector bet and do not continue to manage it
• Continue sector bet

Is my investment case still intact?

While writing the lines about what the ETF actually does, there it was again, this tingling for the topic of automation. I just think it's awesome when companies develop technological solutions that make work easier and or take it away, thereby increasing productivity.

Have you ever been in a sparkling clean warehouse, where the machines and robots just shine and are reflected in the floor? Or things like pressing a button in my home office and seeing a pallet on a conveyor system on the other side of the world? Hach ... I love that.

I'm still burning for the topic and therefore want to remain invested in the sector.

What about the companies in the ETF?

Since I admittedly can't really do much with the current Top10 positions from the ETF, I also sat down again and looked at the companies. Here is a small excerpt from the Top5:

Lattice Semiconductor Corp (USA, 1.56%)

Manufactures programmable semiconductor products for AI, infrastructure 5G and factory automation.

Intuitive Surgical Inc (USA, 1.55%)

Develops and markets robotic video systems for surgery.

Lasertec Corp (JAP, 1.52%)

Develops and sells inspection and measurement equipment.

Coupa Software Inc (USA, 1.50%)

Provides cloud-based software to connect customers with suppliers and optimize supply chains.

Rockwell Automation Inc (USA, 1.49%)

Specializes in automation and control systems for the food, automotive and energy industries.

-> No companies that I would have thought of investing in individually at this point.

A few more familiar faces are also still represented in the ETF. These include, for example.

• Nvidia (0.97%)
• AMD (0.79%)
• Garmin (1.10%)
• Keyence (1.23%)
• SAP (1.30%)
• Snowflake (1.29%)
• Intel (0.79%)

If you look at the weightings of the individual companies, you will notice that they are fairly evenly weighted. A plus point of the ETF in my opinion.

I want to stay invested in the sector. Now the question, whether it remains the ETF or should be switched to individual stocks?

After the research of the companies I have to say that I could not determine the one or the two companies from which I expect the most in the future in the field of automation. Sure, I could put chipmakers or semiconductor stocks in my portfolio to cover even broader areas than just automation, but that would lose me my investment case. And who doesn't believe that we will be operated by remote-controlled robots in the future? 😉

What is the solution now?

By re-examining the ETF and the companies in it, ultimately nothing will change in the positions in my portfolio. The sector bet will continue and after one or two suspensions in favor of individual stocks, will be started again in the new year.

What I will pay attention to is the weighting in the portfolio. By adding the individual stocks, the share of the World+EM dwindles, which I do not want to let fall below 70%.

So even though sector bets are relatively unpopular, at least here on getquin, in some cases they also fulfill an investment case better than single stocks and can therefore work very well as an admixture.

Nevertheless, unlike with a world ETF, you should ask yourself more often whether the stock selection still suits you. Over time, not only the weightings of the positions in such ETFs change, but also personal preferences, risk tolerance and one's own strategy.

In this sense, I wish all who have made it this far a Happy New Year and a positive return year 2023! Let the corks pop 🍾