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Hello everyone, welcome back to our channel. Today we're going to analyze the Invesco CUCU ETS, a very popular option for investing in leading technology companies like Apple, Amazon, and Google. What's this investment alternative like? Want to know my verdict? I'm more in this video. Let's begin. The goal is to replicate the performance of the Nasdaq 100 index without trying to outperform it.
The Nasdaq 100 is a stock market index that measures the performance of the 100 largest, most technologically advanced companies listed on the Nasdaq stock exchange. In case you didn't know, remember that the Nasdaq is an electronic exchange that focuses on technology, biotechnology, communications, and other cutting-edge sectors.
It's made up of high-performing companies with significant market capitalization, such as Apple, Amazon, Microsoft, Intel, Google, Tesla, and Nvidia, among others. This index is considered a proxy for the performance of the technology sector and is commonly used as an indicator of the health of the economy and, obviously, the technology sector.
It's interesting to note that it also includes financial, utility, energy, and other companies. It could, of course, focus on... The i10 or broader indices, to recap, allow investors to gain broad exposure to a variety of leading technology companies across different sectors, such as IT, biotechnology, online services, and communication, among others.
By investing in this i10, they are indirectly investing in companies like Apple, Amazon, Google, Microsoft, Meta, Intel, Tesla, Nvidia, and AMD, among others. The top 10 holdings in this i10 are Microsoft with 11.9%, followed by Apple with 11.7%, Amazon with 6.6%, Alphabet Class 6 and Class A with one and four shares respectively, Nvidia with 3.8%, Tesla with 2.8%, Meta with 2.7%, PepsiCo with two shares, and Bradm with two shares.
This already represents 51.5% of the portfolio. Another very important indicator is the volatility of this instrument. This instrument has a medium-to-long-term volatility of around 20-25%. This is very important because it will reflect both the profitability and how it might vary over time. Our indicated value, having a higher standard deviation, means a riskier instrument, and therefore we should demand a longer investment period.
That is, the investment horizon should be longer, and at the same time, it should obtain a higher return in the long term for this type of asset. Life is inherently risky; the long-term profitability, or long-term roadmap, that the cucumber should have, thinking about 10 to 15 years, is more or less between 10 and 15%.
On the other hand, if we look at the most important factors of this instrument, we see that the P/E ratio, or price-to-earnings ratio, is normally between 22 and 23 times the price-to-earnings ratio. Therefore, when we move out of this zone, we can consider it overvalued, and when it falls below this zone, we can consider it undervalued.
Among its scoring factors, or rather, its main qualities, are that it has high-capitalization companies, as we have already mentioned, and on the other hand, it has high-quality companies. On the other hand, one factor where it doesn't have much exposure is value; that is, it's not an instrument that has value within its assets, and on the other hand, it's the one that usually pays rather low dividends.
What I like is the main reason for investing in the technology sector. The technology sector has some of the fastest-growing companies, or rather, companies, in the last 20, and specifically the last 10 years. Wow! We certainly expect that technology companies, especially cutting-edge ones, will continue to grow and drive global growth across different sectors for the next five, ten, or fifteen years.
In other words, that growth, that value, will be seen for the companies and for investors. Therefore, one of the main reasons I would consider this, the second reason of course being the cost of a very inexpensive instrument where I clearly have significant exposure to the technology sector in a diversified, low-cost way, and the third reason of course is that for portfolios that are risky or balanced and have a long-term structure, this instrument can perfectly have a position of 10, 15, or 20% in a diversified portfolio.
This is not a recommendation, simply an opinion, perfectly clear and understood. What I do n't like, particularly the main reason, is that many investors we know overexpose themselves to this instrument and very similar instruments. Therefore, their portfolios are mostly pure technology. And unfortunately, technology has high volatility and erratic returns in the short term, or in other words, very variable returns in the short term where we can have very positive or very negative results.
Therefore, for short- to medium-term portfolios, this heavily weighted instrument can be a major headache. I'm getting nervous now. On the other hand, my verdict is, of course, it has to be in the portfolio One very important thing is that it has to be in a portion that aligns with the portfolio's objectives, taking into account your risk tolerance, your risk capacity, and, of course, your return requirements for your specific goal.
Excellent! Clearly, since these are three things one is n't usually familiar with studying, I recommend you schedule an appointment with an expert advisor because they can definitely help you learn how to use this instrument and add it to your portfolio. And 10 things you'd like us to analyze, let us know in the comments.
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