The world of tech ETFs is incredibly diverse. These five tech ETFs fulfill various unique investor requirements.
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 stocks can seem like a daunting prospect for new or generalist investors.
Luckily, that is where tech ETFs, or exchange-traded funds, come 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…
With exposure to US electronics, computer software and hardware and informational technology companies, the iShares US Technology 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 (NASDAQ:FB), NVIDIA (NASDAQ:NVDA) and Alphabet (NASDAQ:GOOGL). Investors in this ETF will be covered when it comes to American tech giants. However, those who want to get a bit more creative with their holdings may want to look elsewhere.
2. If you want a more specialized ETF investment…
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, along with big data and analytics.
If big data isn’t your thing, but the idea of a more specialized ETF still appeals, Global X also has the Global X Cloud Computing ETF (NASDAQ:CLOU) for those interested in cloud technology, the Global X FinTech Thematic ETF (NASDAQ:FINX) for fintech-focused investors and the 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…
The Technology Select Sector SPDR Fund is another key tech ETF to consider. Indeed, its total assets under management of more than US$35 billion make it one of the largest in the ETF industry.
The Technology Select Sector SPDR Fund’s top holdings mirror those of the iShares US Technology ETF, and performance-wise they are on par: however, the Technology Select Sector SPDR Fund’s expense ratio is much lower at 0.13 percent compared to an expense ratio of 0.42 percent for the iShares ETF.
4. If you want to invest in the global tech sector…
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…
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 ETFdb.com. “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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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.