"The Macro Factor: Small-Cap Tech Valuation Reset The biggest macro driver for PSCT is the repricing of small-cap technology stocks as interest rate expectations find their footing. After years of compression driven by rising rates, small-cap tech valuations are finally resetting. Many of PSCT's holdings operate in capital-intensive segments like semiconductors, networking equipment, and contract manufacturing. These businesses benefit from lower financing costs and improved access to capital for expansion."
"The Invesco S&P SmallCap Information Technology ETF (NYSEARCA:PSCT) has captured investor attention with an impressive 23% gain over the past year. This all stems from the fund's concentrated approach, holding just 75 carefully selected small-cap tech companies rather than diluting returns across hundreds of names. The strategy keeps costs competitive at 0.29% while allowing top holdings like InterDigital (NASDAQ:IDCC) and Sanmina (NASDAQ:SANM) to meaningfully influence performance."
PSCT returned 23% over the past year driven by a concentrated portfolio of 75 small-cap technology companies. The fund charges a 0.29% expense ratio and allows top holdings like InterDigital and Sanmina to meaningfully influence returns. Repricing of small-cap tech valuations is occurring as interest rate expectations stabilize, benefiting capital-intensive businesses such as semiconductors, networking equipment, and contract manufacturers through lower financing costs and improved capital access. Semiconductor equipment and component manufacturers are particularly sensitive due to heavy R&D and production capital needs. Concentration in cyclical subsectors introduces higher volatility, exemplified by Marathon Digital's rapid revenue swings tied to Bitcoin.
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