It’s easy to become overwhelmed by the wealth of tech stocks on the market today.
It’s a universal truth that there is money to be made in this market, but knowing where to look for the best tech stock can seem like a daunting prospect for new or generalist investors.
Luckily, that is where a tech ETF, or
exchange traded fund
, comes in. Tech ETFs are marketable securities that track an index, a commodity, bonds or a collection of assets. Flexible and easy to trade, investors can buy and sell ETFs like stocks, usually through a brokerage account. Without further ado, here are five tech ETFs for investors to consider.
1. If you want to invest in major technology stocks…
iShares US Technology ETF
(ARCA:
IYW
)
With exposure to US electronics, computer software and hardware and informational technology companies, the iShares ETF covers all the big names on the US tech scene. To give you a taste, the ETF’s top five holding are Apple (NASDAQ:
AAPL
), Microsoft (NASDAQ:
MSFT
), Facebook Class A (NASDAQ:
FB
), NVIDIA (NASDAQ:
NVDA
) and Alphabet Class A (NASDAQ:
GOOGL
). Investors in this ETF will be covered when it comes to American tech giants. However, investors who want to get a bit more creative with their holdings may want to look elsewhere.
2. If you want to a more specialized ETF investment…
Global X Future Analytics Tech ETF (NASDAQ:
AIQ
)
If you have a general idea of which tech sector to invest in, more specialized ETF investments may be the way to go. The
Global X Future Analytics Tech ETF
was created to offer the market a transparent vehicle to invest in companies that stand to benefit from the development and use of
artificial intelligence
(AI) and the big data and analytics industry.
The top five holdings in this ETF are Qualcomm (NASDAQ:
QCOM
), Meituan Class B shares (HK:
3690
), salesforce.com (NYSE:
CRM
), NVIDIA and Samsung Electronics (KS:
005930)
.
If big data isn’t your thing, but the idea of a more specialized ETF still appeals, Global X also has a
Global X Cloud Computing ETF
(NASDAQ:
CLOU
) for those interested in
cloud
technology, a
Global X FinTech Thematic ETF
(NASDAQ:
FINX
) for
fintech
focused investors, and
Global X Cybersecurity ETF
(NASDAQ:
BUG
) for those eyeing growth in the
cybersecurity
market.
3. If you’re looking for a tech ETF with significant net assets…
Technology Select Sector SPDR (ARCA:
XLK
)
The
Technology Select Sector SPDR
is another key tech ETF to consider. Indeed, its total assets under management of US$35,863.3 million make it one of the largest in the ETF industry. For instance, while the iShares US Technology ETF has US$6,321.7 million in assets under management.
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The Technology Select Sector SPDR ETF’s top holdings mirror that of iShares, and performance wise they are on par: however, XLK’s expense ratio is much lower at 0.13 percent compared to an expense ratio of 0.42 percent for IYW.
4. If you want to invest in the global tech sector…
iShares Global Tech ETF (ARCA:
IXN
)
There is no denying that North America is a hotbed of tech innovation, and many ETFs, like the
iShares North American Tech ETF
(NYSEARCA:
IGM
) and the
iShares North American Tech-Software ETF
(NYSEARCA:
IGV
), reflect that. However, there are also many excellent tech stocks outside of North America, and the
iShares Global Tech ETF
reflects this diversity. While almost 79.4 percent of the stocks held by this ETF are located in the US, it also represents significant investment in the Japanese, Taiwanese, South Korean, Chinese, Brazilian, Australian and German tech markets.
5. If you’re looking for small-cap tech companies…
Invesco S&P SmallCap Information Technology ETF (NASDAQ:
PSCT
)
The
Invesco S&P SmallCap Information Technology ETF
could be a good option if you are looking for a small-cap focus in your ETF. Unlike the tech giants included in the iShares US Technology ETF, this fund keeps its focus on smaller companies. “PSCT tracks a broad index of small companies in the information technology sector which the issuer considers to be the following areas; software, internet, electronics, semiconductors, communication and hardware,”
reports
ETF Database. “As a result, this fund tracks some of the quickest growing and most volatile companies in the technology sector.”
The ETF’s top five investments are Brooks Automtation (NASDAQ:
BRKS
), Power Integrations (NASDAQ:
POWI
), Advanced Energy Industries (NASDAQ:
AEIS
), SPS Commerce (NASDAQ
SPSC
) and LivePerson (NASDAQ:
LPSN
).
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@INN_Technology
for real-time updates!
This is an updated version of an article first published by the Investing News Network in 2016.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.