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Tech ETFs Are Back in Momentum, Soar to All-Time High
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After witnessing wild swings last month, the technology sector is back in favor with a positive momentum build-up in the space. Treasury yields, which had sparked overvaluation concerns, have been falling lately, providing a big boost to the mega-cap tech names. Notably, the 10-year Treasury yield slipped below 1.6% for the first time since Mar 25.
Additionally, the Fed’s accommodative monetary policy as well as the new stimulus has been rekindling hopes in investors for the technology sector. Further, a pause in the use of Johnson & Johnson's (JNJ - Free Report) COVID-19 vaccine sparked doubts over a global economic rebound, which is expected on a wider and rapid vaccine distribution. This in turn prompted investors to rotate out of stocks poised to profit from a post-pandemic economic recovery and into the companies that could benefit from a slower vaccine rollout (read: JNJ Vaccine Pause Gives Stay-at-Home ETFs a Shot in the Arm).
Added to the strength is the optimism over stronger Q1 earnings growth. The technology sector earnings are expected to be up 22.3% from the figure reported for the same period last year while revenues are projected to grow 17.2%. This will follow earnings and revenue growth of 21.5% and 14.7%, respectively, seen in fourth-quarter 2020.
Moreover, the sector outlook remains solid given the global digital shift even in the post-COVID world with the acceleration in e-commerce for everything, ranging from remote working to entertainment and shopping. The rapid adoption of cloud computing, big data, IoT, wearables, VR headsets, drones, virtual reality, AI, machine learning, digital communication and 5G technology will continue to drive the sector higher (see: all the Technology ETFs here).
Against this backdrop, we highlighted a number of tech ETFs that hit all-time highs in the last trading session and are the popular choices in the space. Any of these could be excellent plays for investors looking to ride out the bullish trend in the coming months given their high momentum and a broad exposure across industries in the sector.
It follows the Technology Select Sector Index and holds about 74 securities in its basket. With an AUM of $41.1 billion, the fund charges 12 bps in fees per year from investors and trades in a heavy volume of 9.1 million shares a day, on average. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: PC Sales See Best Growth in 2 Decades: Tech ETFs to Buy).
This fund manages $44.4 billion in its asset base and provides exposure to technology companies that serve the electronics and computer industries or that manufacture products. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. The ETF has 0.10% in expense ratio while volume is solid at nearly 520,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
This ETF offers exposure to U.S. electronics, computer software and hardware, and informational technology companies by tracking the Dow Jones US Technology Index. The fund amassed $7.3 billion in its asset base and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 946,000 shares in hand a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Best ETF Investment Strategies for Q2 2021).
This fund follows the MSCI USA IMI Information Technology Index. It is home to 329 stocks with AUM of $5.6 billion and an expense ratio of 0.08%. Volume is solid at 330,000 shares a day. It carries a Zacks ETF Rank #2 with a Medium risk outlook.
This is an active ETF that employs data science techniques to provide exposure to technology stocks. IETC accumulated $102.1 million in its asset base and trades in a light volume of 19,000 shares. It charges 18 bps in annual fees (read: ETFs to Gain From Microsoft's AI Voice Provider Nuance Buyout).
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to hardware, software, Internet marketing, interactive media and related companies. The fund has AUM of $3.4 billion and charges 46 bps in annual fees. It trades in a moderate volume of nearly 38,000 shares in hand a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco S&P 500 Equal Weight Technology ETF
This ETF offers equal-weight exposure to tech firms by tracking the S&P 500 Equal Weight Index Information Technology Index. It gathered $2.6 billion in its asset base while trades in a moderate volume of around 47,000 shares. The fund charges 40 basis points in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Tech ETFs Are Back in Momentum, Soar to All-Time High
After witnessing wild swings last month, the technology sector is back in favor with a positive momentum build-up in the space. Treasury yields, which had sparked overvaluation concerns, have been falling lately, providing a big boost to the mega-cap tech names. Notably, the 10-year Treasury yield slipped below 1.6% for the first time since Mar 25.
Additionally, the Fed’s accommodative monetary policy as well as the new stimulus has been rekindling hopes in investors for the technology sector. Further, a pause in the use of Johnson & Johnson's (JNJ - Free Report) COVID-19 vaccine sparked doubts over a global economic rebound, which is expected on a wider and rapid vaccine distribution. This in turn prompted investors to rotate out of stocks poised to profit from a post-pandemic economic recovery and into the companies that could benefit from a slower vaccine rollout (read: JNJ Vaccine Pause Gives Stay-at-Home ETFs a Shot in the Arm).
Added to the strength is the optimism over stronger Q1 earnings growth. The technology sector earnings are expected to be up 22.3% from the figure reported for the same period last year while revenues are projected to grow 17.2%. This will follow earnings and revenue growth of 21.5% and 14.7%, respectively, seen in fourth-quarter 2020.
Moreover, the sector outlook remains solid given the global digital shift even in the post-COVID world with the acceleration in e-commerce for everything, ranging from remote working to entertainment and shopping. The rapid adoption of cloud computing, big data, IoT, wearables, VR headsets, drones, virtual reality, AI, machine learning, digital communication and 5G technology will continue to drive the sector higher (see: all the Technology ETFs here).
Against this backdrop, we highlighted a number of tech ETFs that hit all-time highs in the last trading session and are the popular choices in the space. Any of these could be excellent plays for investors looking to ride out the bullish trend in the coming months given their high momentum and a broad exposure across industries in the sector.
Technology Select Sector SPDR Fund (XLK - Free Report)
It follows the Technology Select Sector Index and holds about 74 securities in its basket. With an AUM of $41.1 billion, the fund charges 12 bps in fees per year from investors and trades in a heavy volume of 9.1 million shares a day, on average. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: PC Sales See Best Growth in 2 Decades: Tech ETFs to Buy).
Vanguard Information Technology ETF (VGT - Free Report)
This fund manages $44.4 billion in its asset base and provides exposure to technology companies that serve the electronics and computer industries or that manufacture products. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. The ETF has 0.10% in expense ratio while volume is solid at nearly 520,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares U.S. Technology ETF (IYW - Free Report)
This ETF offers exposure to U.S. electronics, computer software and hardware, and informational technology companies by tracking the Dow Jones US Technology Index. The fund amassed $7.3 billion in its asset base and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 946,000 shares in hand a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Best ETF Investment Strategies for Q2 2021).
MSCI Information Technology Index ETF (FTEC - Free Report)
This fund follows the MSCI USA IMI Information Technology Index. It is home to 329 stocks with AUM of $5.6 billion and an expense ratio of 0.08%. Volume is solid at 330,000 shares a day. It carries a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Evolved U.S. Technology ETF (IETC - Free Report)
This is an active ETF that employs data science techniques to provide exposure to technology stocks. IETC accumulated $102.1 million in its asset base and trades in a light volume of 19,000 shares. It charges 18 bps in annual fees (read: ETFs to Gain From Microsoft's AI Voice Provider Nuance Buyout).
iShares Expanded Tech Sector ETF (IGM - Free Report)
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to hardware, software, Internet marketing, interactive media and related companies. The fund has AUM of $3.4 billion and charges 46 bps in annual fees. It trades in a moderate volume of nearly 38,000 shares in hand a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco S&P 500 Equal Weight Technology ETF
This ETF offers equal-weight exposure to tech firms by tracking the S&P 500 Equal Weight Index Information Technology Index. It gathered $2.6 billion in its asset base while trades in a moderate volume of around 47,000 shares. The fund charges 40 basis points in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>