Do you want to invest in technology ETFs? Here, the Investing News Network takes a look at the top five for investors to consider.
The global tech market could see growth decline to 2% in 2020 as the COVID-19 pandemic continues to impact markets around the world, Forrester reports.
Among segments of the global technology market, software spending is expected to experience the largest decline, while technology outsourcing and telecommunications services will fare better during the coronavirus outbreak.
On a positive note, with more offices and schools shifting to remote working and e-learning, demand is increasing for cloud computing infrastructure services, specialized software, communications equipment. and, as mentioned, telecommunications services.
Once the global tech sector, which previously stood at $ 1 trillion, rebounds, exchange-traded funds (ETFs) will continue to be a popular alternative investment strategy that investors can use to gain equity. exposure to technology stocks. ETFs offer market participants new opportunities to invest in stocks and bonds, while reducing expenses and facilitating access to the financial services industry.
Whether it is value or growth investing styles, there are many different investment objectives that can be targeted on the plethora of tech ETFs available in the market. These investment vehicles also offer the option of entering individual mutual funds or technology stocks, or participating in initial public offerings.
In the tech ETF space, there are 76 tech funds with a cumulative total of $ 140.05 billion in assets under management, according to data from ETFdb.com. On average, the expense ratio of tech ETFs is 0.6%. Here, the Investing News Network examines high-tech ETFs by assets under management; all figures and figures were up to date as of July 13, 2020.
1. Vanguard Information Technology ETF (ARCA: VGT)
Assets under management: 33.88 billion USD
Founded on January 26, 2004, the Vanguard Information Technology ETF has a diversified portfolio focused on small and micro cap stocks as well as large cap companies.
This technology ETF has 338 holdings, with Apple (NASDAQ: AAPL) leading the way with 18.2%. Microsoft (NASDAQ: MSFT) takes 17.32% of the fund, followed by Visa (NYSE: V) with a weighting of 4.07% and Mastercard (NYSE: MA) at 3.52%.
2. SPDR Sector Fund for Technology (ARCA: XLK)
Assets under management: USD 32.72 billion
The Technology Select Sector SPDR Fund has 73 technology companies in its holdings and began trading on December 16, 1998. This ETF generally avoids small and mid-cap companies and instead focuses on the big names in the technology sector.
Its main holdings are: Microsoft at 22.24%, Apple weighted at 21.45%, Visa at 4.46%, Mastercard at 3.59% and Cisco (NASDAQ: CSCO) at 2.72%.
3. First Trust Dow Jones Internet Index Fund (ARCA: FDN)
Assets under management: USD 9.83 billion
The First Trust Dow Jones Internet Index Fund was established on June 23, 2006 and currently has 42 securities exposed to Internet-focused companies. This fund targets technology companies, but also gives some weight to consumer discretionary companies.
In terms of market capitalization distribution, large cap companies make up 66% of this fund, while the rest of its holdings are in the mid and small cap categories.
The main holdings of this fund are: Amazon (NASDAQ: AMZN) at 10.55%, Facebook (NASDAQ: FB) at 6.81%, Netflix (NASDAQ: NFLX) at 5.66%, PayPal (NASDAQ: PYPL) at 4.96% and Salesforce. com (NASDAQ: CRM) at 4.57%.
4. iShares US Technology ETF (ARCA: IYW)
Assets under management: USD 5.8 billion
The iShares US Technology ETF was launched on May 19, 2000 and currently has 163 holdings focused on US technology companies.
The main holdings of this fund are very much in line with its peers. Microsoft weighs 19.41%, followed by Apple with 18.63%. The two Alphabet stocks, (NASDAQ: GOOG) and (NASDAQ: GOOGL), account for just over 7.8% of the total ETF weighting, capped by Facebook at 4.4%.
5. ETF iShares Expanded Tech-Software Sector (CBOE: IGV)
Assets under management: USD 5.1 billion
The iShares Expanded Tech-Software Sector ETF is supplemented by the list of technology ETFs. With 104 participations, it offers specific exposure to software companies in North America.
The main holdings of this iShares ETF are Adobe (NASDAQ: ADBE) with a weighting of 8.79%, Microsoft with 8.51%, Salesforce.com with 8.62%, Oracle (NYSE: ORCL) with 7.66% and Intuit (NASDAQ: INTU), weighted at 5.14 percent.
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Disclosure of Title: I, Melissa Pistilli, do not have any direct investments in any of the companies mentioned in this article.