How TDAM is Redefining Technology Investing

Technology is not just reshaping industries—it’s rewriting the rules of global investment. As innovation accelerates, the question for investors is no longer if they should invest in technology, but how. TD Asset Management Inc. (TDAM) answers this with their TD Global Technology Leaders Index ETF (TSX: TEC) and TD Global Technology Innovators Index ETF (TSX: TECI), offering a gateway into the cutting-edge companies that are driving the future.

Vitali Mossounov, Vice President & Director, Co-Lead of Research at TDAM, plays a crucial role in guiding the firm’s technology investment strategy. With a background in public equity research and expertise in the technology sector, Mossounov understands both the opportunities and risks that come with investing in this rapidly evolving industry. Reflecting on the recent bout of market volatility, he explains that while such moments can feel stressful, corrections are not uncommon – they are in fact, an innate feature of the market as it oscillates between exuberance and caution. This perspective underscores the importance of maintaining a balanced and long-term approach to investing.

And in a similar vein, investing in technology isn’t just about following trends or chasing the latest hype cycle; it’s about understanding the underlying value that technology companies offer. Over the past decade, the technology sector has demonstrated strong earnings and cash flow growth, more than twice as fast as non-technology sectors . This highlights the importance of a technology allocation in a diversified portfolio, particularly for those seeking capital appreciation. This historical performance highlights the importance of a technology allocation in a diversified portfolio, particularly for those seeking capital appreciation.

At its core, technology is about applying cutting-edge science to practical, real-world applications. And so, TDAM's technology sector exchange traded funds (ETFs), TEC and TECI, are designed with a broad and inclusive definition of what constitutes a technology company. What sets them apart is their proprietary framework for identifying technology companies, which allows TDAM to include a wide array of companies in these ETFs. Unlike traditional indices, which may narrowly define technology, TDAM broadens the scope to include companies that, while not traditionally classified as tech firms, are driving significant innovation. This approach results in ETFs that are not only unique in their composition but also diversified across geographies and sectors, providing well-rounded exposure to the global technology landscape. As Mossounov states, "We broadened out the aperture of how we think about technology. Most of the market is operating on definitions from the 1980s and 90s, before most of the current technology champions were even founded. And it’s created an enormous opportunity to add value to investors and I'll let the performance of these products testify to the success of this philosophy."

^{[1] Source: Bloomberg Finance L.P.}

With TEC, investors get exposure to global large and mid-cap companies with a focus on core technologies powering the world, and its largest holdings include Apple, Microsoft, NVIDIA, Amazon, and Meta. On the other hand, TECI may be suitable for investors who seek to participate in the emerging technology trends of the next decade. Instead of Big Tech, the largest holdings are dominated by quality companies still in the early to middle stages of their growth cycle, for instance companies like ServiceNow, Palo Alto Networks, Mercadolibre, Arista Networks, and Shopify.

Looking ahead, Mossounov remains optimistic about the future of technology as the rate of innovation only continues to accelerate. While AI is currently at the forefront, other emerging and even as of yet unknown technologies will play significant roles in shaping the future. TEC and TECI are well-positioned to capitalize on these developments, offering investors a compelling opportunity to participate in the growth of the global technology sector. They represent a forward-thinking approach to technology investing, balancing the potential for high growth with the caution necessary to navigate a rapidly evolving market.

For more information on TEC, TECI, and other TD ETFs, visit td.com/ETFs.

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