Big Tech portfolio – unstoppable behemoths

My investment portfolio already has a considerable leaning towards technology because it’s a sector I feel I have a reasonable understanding of and quite frankly it’s the future. There’s no getting away from the fact that our world has already been considerably shaped by tech and will it continue to influence every facet of our lives.

I had already taken a considerable position in the technology sector via the First Trust Dow Jones Internet ETF, with one of the reasons for doing so being the exposure to Big Tech. But I’m not entirely comfortable with the rebalancing and change in holdings. Maybe I should just invest in a Nasdaq 100 ETF tracker?

I have therefore decided to increase my investment in this sector, but this time want to concentrate it amongst the five tech giants : Amazon, Apple, Alphabet, Facebook and Microsoft. I want an allocation that will provide a reasonable guide to their relative importance, so have pulled out their respective market caps, to which I’m going to allocate according to their size. I’m not kidding myself that this isn’t simplistic, but I feel I must have direct exposure to these companies given their dominance in so many areas of technology.

Here at the details from the Nasdaq stock exchange:

CompanyMarket capWeight
Apple$1,910,228,121,20028%
Facebook$710,580,129,48410%
Amazon.com$1,521,282,012,43122%
Microsoft$1,538,049,782,50923%
Alphabet$979,850,534,21714%
Figures from 22 September 2020.

Together, these companies represent more than $6.6 trillion in market cap. However, I have already noticed one error I’ve made here in not including the other share class of Alphabet, better known as Google. I decided to select the share class that retains the voting rights, yet I didn’t include the other non-voting share class in my calculation. So for the moment my Big Tech portfolio is underweight on Alphabet, something I intend to rectify next month when I make further additions to the portfolio.

I’d also like to add, before I sign off, that Big Tech has indeed seen an incredible surge in value this year linked to the machinations on the stock market with respect to the coronavirus pandemic. Some of these top five companies have already seen considerable corrections and I expect that might continue to be the case. Mine is not an exercise in timing. If they do fall further, I expect to continue topping up.

Neither am I ignorant of the fact that anti-competitive practices or other regulatory concerns, especially for Facebook, may catch up to some of these companies. Indeed, that has already been a concern for Microsoft in decades past. Nevertheless, all in all, I consider these companies behemoths whose continuing march on appears unstoppable, making them essential investments.

Main photo: Apple Store, Bethesda, MD, US by Adam Fagen licensed under Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0).

Disclaimer

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