Investors Are Rotating Out of Tech Funds. How to Know if You Should Do the Same

During the week ended Oct. 14, U.S. tech funds recorded roughly $5.21 billion in net outflows. Given that U.S. equity funds pulled in $13.01 billion around the same time, it may be that everyday investors are reallocating holdings rather than abandoning equities altogether. Image source: Getty Images. Primary concerns surrounding tech exchange-traded funds vary by investor, but the use of debt to finance artificial intelligence (AI) infrastructure appears to be one cause of concern. Higher borrowing costs put pressure on tech companies' profits and make growth stocks less attractive because future earnings are discounted at higher interest rates.

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