XT: More Sensitive Than General Market To Cost Of Capital Changes

Valkyrie Trading SocietyInvesting Group LeaderFollow5ShareSavePlay(8min)CommentsSummaryThe iShares Future Exponential Technologies ETF is highly sensitive to cost of capital shifts, driven by its tech and disruptor focus, also with a lot of high-multiple healthcare.XT's global diversification does not mitigate its vulnerability to rising rates and geopolitical risks, especially from the Iran conflict, which is having a global upward cost of capital shift effect.XT is less concentrated in mega-cap US tech than IVV, but its higher IT and healthcare exposure increases sensitivity to inflation and capital costs and maintains sensitivity to overbuild risks.We see more risks than supports for XT, given fragile geopolitics and amplified yield curve sensitivity. Lower multiple alternatives in equity markets often present less cost of capital sensitivity.Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More » SlavkoSereda/iStock via Getty Images The iShares Future Exponential Technologies ETF (XT) is an international, but still mostly US, tech-focused ETF that tries to capture a disruptor factor in markets. It is quite correlated to the US markets in general.This article was written byValkyrie Trading Society5.54K FollowersFollowThe Valkyrie Trading Society is a team of analysts sharing high conviction and obscure developed market ideas that are downside limited and likely to generate non-correlated and outsized returns in the context of the current economic environment and forces. They are long-only investors.They lead the investing group The Value Lab where they offer members a portfolio with real time updates, chat to answer questions 24/7, regular global market news reports, feedback on member stock ideas, new trades monthly, quarterly earnings write-ups, and daily macro opinions.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.