Overall high tech valuations have been a matter of concern for institutional investors in the Year Till Date (YTD). In Bank of America’s Fund Manager Survey for August 2023, the consensus among survey respondents representing 211 fund managers with $545 billion of AUM was that their portfolios’ tech allocation is the most overweight, i.e. over-represented in returns relative to their weight, since December 2021.

In Conclusion

Overall trends indicate that AI-driven pile-ons into tech will likely be causing volatility in US equity markets while global growth outlook is affected as the world continues to seek fragmentation due to economic security concerns. While it’s certainly not true that tech would decline per se, the fact remains that they’re far too overvalued in terms of prospective addressable market size.

In terms of market breadth, it’s pretty much a buyer’s market for the discerning investor with the requisite reach. A wide variety of equities from around the world are increasingly attractive while bond markets offer strong risk-adjusted alternatives to earnings. The estimated return of a classic – dividend-driven investing – proves how valuable periodic coupon payments are proving to be in driving investor choices. The same reasoning applies towards the increasing favourability of bond markets and another disquieting factor for equity valuations.

All in all, it pays to stay well-researched, diversified and be wary of singular growth narratives.