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5 Technology ETFs for Every Investing Style
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 amount of tech stocks on the market today.
There are plenty of opportunities in this space, but knowing where to look for the best tech stocks can seem like a daunting prospect for new or generalist investors.
Luckily, tech exchange-traded funds (ETFs) offer a solution. 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
With exposure to US electronics, computer software and hardware and informational technology companies, the iShares US Technology ETF (ARCA:IYW) covers all the big names in the US tech scene.
To give you a taste, the ETF’s top five holding are Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE:TSM,TPE:2330) and Visa (NASDAQ:V). 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…
Global X Artificial Intelligence & Technology ETF
If you have a general idea of which tech sector to invest in, more specialized ETF investments may be the way for you to go. The Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ) was created to offer market participants 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.
The top five holdings in this ETF are Amazon (NASDAQ:AMZN), NVIDIA, Apple, Alphabet (NASDAQ:GOOGL) and Alibaba Group Holding (NYSE:BABA).
If big data isn’t your thing, but the idea of a specialized ETF appeals, Global X also has the Global X Cloud Computing ETF (NASDAQ:CLOU) for those interested in cloud technology, the Global X FinTech ETF (NASDAQ:FINX) for fintech-focused investors and the Global X Cybersecurity ETF (NASDAQ:BUG) for those eyeing cybersecurity.
3. If you’re looking for a tech ETF with significant net assets…
Technology Select Sector SPDR Fund
The Technology Select Sector SPDR Fund (ARCA:XLK)is another key tech ETF to consider. Indeed, its total assets under management of more than US$46 billion make it one of the largest in the 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 0.12 percent compared to an expense ratio of 0.43 percent for the iShares ETF.
4. If you want to invest in the global tech sector…
iShares Global Tech ETF
North America is a hotbed of tech innovation, and many ETFs, like the iShares Expanded Tech Sector ETF (ARCA:IGM) and the iShares Expanded Tech-Software ETF (ARCA:IGV), reflect that.
However, there are also many excellent tech stocks outside of North America, and the iShares Global Tech ETF (ARCA:IXN) reflects this diversity. While more than 78 percent of the stocks held by this ETF are located in the US, it also represents 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
The Invesco S&P SmallCap Information Technology ETF (NASDAQ:PSCT) 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 in a profile of the ETF. “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 Rogers (NYSE:ROG), Vonage Holdings (NASDAQ:VG), SPS Commerce (NASDAQ:SPSC), MaxLinear (NASDAQ:MXL) and Onto Innovation (NYSE:ONTO).
Don’t forget to follow us @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.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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