Technology stocks have long been thought of as high beta, or more prone to sharp price swings than, say, a consumer staples or utilities company. Not so much anymore: Technology stocks are currently among the least volatile in the S&P 500 and are experiencing an influx of broad-based buying by a cross-section of investors. Growth funds, hedge funds, momentum strategies and multi-asset strategies have been drawn to technology stocks for their higher growth rates, visibility of earnings, strong balance sheets and dominance in their industries.
There’s no doubt market volatility has declined broadly as stocks have climbed steadily for the past 17 months, supported by central bank-induced liquidity, an improving global economy and earnings growth. But this can reverse quickly in a market correction.
So why is volatility so low now? Here, portfolio managers and analysts at Capital Group weigh in: