Tech Trade Overcrowding Swallows ETF Flows; Strategas Flags Escape Routes in SPLV, HDV, PEJ

Since the S&P 500's March 30 low, technology ETFs have captured the bulk of sector flows, with cumulative flows to all other sectors turning slightly negative as of late May, according to Strategas. The crowding extends beyond dedicated tech funds: the iShares Russell 1000 Growth ETF (IWF) and Invesco Nasdaq 100 ETF (QQQM) are more than half tech. More critically, factor-based ETFs carry hidden tech weightings — the iShares MSCI USA Value Factor ETF (VLUE) and Momentum Factor ETF (MTUM) are nearly 50% tech, while the iShares MSCI USA Quality Factor ETF (QUAL) is over one-third tech. The iShares MSCI Emerging Markets ETF (EEM) holds more than 40% tech. Strategas strategist Todd Sohn points investors toward low-tech, low-correlation alternatives, including the Invesco S&P 500 Low Volatility ETF (SPLV), iShares Core High Dividend ETF (HDV), and ProShares S&P 500 Dividend Aristocrats ETF (NOBL). For a potential consumer rebound — as the equal-weight consumer discretionary sector’s relative performance sits in its bottom decile over 20 years — Sohn favors the Invesco Leisure and Entertainment ETF (PEJ), which bypasses heavyweights Amazon and Tesla for travel, hotels, and cruises. Short-term Treasury ETFs also offer yield with low volatility.