I am fast becoming a fan of technology as an investment opportunity. When I read the headline for the Aug. 4 lead story in The Wall Street Journal, it confirmed my view that technology is a sector that should hold up well during the current economic slowdown.

The article’s headline, “Tech Gadgets Steal Sales from Appliances, Clothes,” is based on an Aug. 3 report by the U.S. Department of Commerce. The report found that spending on televisions, computers, video and telephone equipment rose 1.8% in the first six months of 2010, while spending on appliances and furniture fell 3.6% and 11%, respectively, during the same period. For that reason, I think the Technology Select Sector SPDR (XLK) exchange-traded fund (ETF) is worth considering as an investment, especially given the latest market pullback.

Indeed, devices such as Apple’s (AAPL) iPhone 4 and the iPad, Corning Inc.’s (GLW) liquid crystal displays (LCDs) used by computers and flat-screen televisions, and Blu-ray video players are enticing consumers to spend money. The result is improving performance for technology companies. To that end, the latest quarterly earnings for Apple and Corning rose 78% and 49%, respectively, compared to the same quarter last year, the companies recently reported.

XLK is a fund that invests primarily in products developed by internet software and service companies, IT consulting services, semiconductor equipment and products, computers and peripherals, diversified telecommunication services and wireless telecommunications services. Apple ranked as the fund’s biggest holding, as of Aug. 10, with 10.71%. The other top ten holdings in the fund, as of that date, were: Microsoft (MSFT), 8.66%; International Business Machines (IBM), 7.67%; AT&T (T), 7.24%; Cisco Systems (CSCO), 6.31%; Google (GOOG), 5.53%; Oracle (ORLC), 4.34%; Intel (INTC), 4.27%; Verizon Communications (VZ), 3.87%; and Hewlett-Packard (HPQ), 3.72%. Corning ranked 15th on the list, with 1.34%.

Think about the last time you really wanted to buy something special and I am betting that it included some kind of advanced technology. Whether it was a new computer, a high-definition television or an e-book reading device, some of the most popular purchases these days feature technology.

The demand for technology products is important because the Department of Commerce found that personal saving as a percentage of disposable personal income was 6.4% in June, compared with 6.3% in May. In addition, personal consumption expenditures (PCE) decreased by $2.9 billion, or just under 0.1%. Further, the price index for PCE decreased 0.1% in June, the same decrease as in May. Those numbers mean that consumers are saving a bit more than usual. With people scaling back their spending, I like the idea of buying a fund that tracks the technology sector, which seems to be gaining sales at the expense of other parts of the economy.

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