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The technology sector has gone into a tailspin lately thanks to renewed inflation fears. The ongoing economic recovery post pandemic has led to a surge in prices for broad-based commodities that could prompt the Federal Reserve to tighten policies earlier than expected. This rising rate worries have dampened the appeal for the stocks that rely on easy borrowing for superior growth.
In any case, tech stocks are guilty of overvaluation. Social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge on online shopping, and work as well as learn from home, thereby boosting demand for technology. Tech stocks, high-growth in nature, tend to have higher-than-average price-to-earnings ratios, whose valuations depend heavily on future earnings.
Moreover, data showing that housing starts slumped sharply last month also weighed on sentiment.Growth-heavy stocks have remained under pressure in recent sessions as rising rates hurt this segment more than the value ones. Inflation above the Fed’s 2% target for a prolonged period would lead the central bank to raise rates from the rock-bottom level and hurt the stocks that outperformed in the low-rate environment.
Against this backdrop, below we highlight a few tech ETFs that stayed steady in the past five days. The key tech ETF Technology Select Sector SPDR Fund (XLK - Free Report) lost about 0.4% past week while VanEck Vectors Digital Transformation ETF (DAPP - Free Report) and Amplify Transformational Data Sharing ETF (BLOK - Free Report) lost about 8.7% and 7.3%, respectively.
The underlying S&P Kensho Moonshots Index comprises of 50 U.S. companies that pursue innovative technologies with the potential to disrupt existing technologies and have the highest early-stage composite innovation scores determined on a natural language processing review of the latest annual regulatory filing of the company for the use of words & phrases related to innovation. The fund charges 65 bps in fees.
Global X Cybersecurity ETF (BUG - Free Report) – Up 0.90%
The underlying Indxx Cybersecurity Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from the increased adoption of cybersecurity technology, including but not limited to companies whose principal business is in the development & management of security protocols preventing intrusion & attacks to systems, networks, applications, computers & mobile devices. The fund charges 50 bps in fees.
ETFMG Prime Cyber Security ETF (HACK - Free Report) – Up 0.83%
The underlying Prime Cyber Defense Index utilizes a rules-based investment methodology to select a diverse group of companies actively involved in the cyber security industry. The fund charges 60 bps in fees.
The underlying S&P North American Expanded Technology Software Index comprises North American equities in the software industry and select North American equities from interactive home entertainment and interactive media and services industries. The fund charges 46 bps in fees (read: Bet on Cash-Rich Tech ETFs & Stay Away From the Rout).
The underlying Total 3D-Printing Index comprises equity securities and depositary receipts of exchange listed companies from the U.S., non-U.S. developed markets & Taiwan that are engaged in 3D printing related businesses within the following business lines: 3D printing hardware, computer aided design & 3D printing simulation software, 3D printing centers, scanning & measurement and 3D printing materials. The fund charges 66 bps in fees.
Invesco S&P 500 Equal Weight Technology ETF – Up 0.1%
The underlying S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology sector of the S&P 500 Index. The fund charges 40 bps in fees.
First Trust NASDAQ CEA Cybersecurity ETF (CIBR - Free Report) – Up 0.1%
The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. The fund charges 60 bps in fees.
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7 Tech ETFs That Survived the Recent Turmoil
The technology sector has gone into a tailspin lately thanks to renewed inflation fears. The ongoing economic recovery post pandemic has led to a surge in prices for broad-based commodities that could prompt the Federal Reserve to tighten policies earlier than expected. This rising rate worries have dampened the appeal for the stocks that rely on easy borrowing for superior growth.
In any case, tech stocks are guilty of overvaluation. Social distancing norms enacted globally to mitigate the spread of the virus compelled people to stay at home, binge on online shopping, and work as well as learn from home, thereby boosting demand for technology. Tech stocks, high-growth in nature, tend to have higher-than-average price-to-earnings ratios, whose valuations depend heavily on future earnings.
Moreover, data showing that housing starts slumped sharply last month also weighed on sentiment.Growth-heavy stocks have remained under pressure in recent sessions as rising rates hurt this segment more than the value ones. Inflation above the Fed’s 2% target for a prolonged period would lead the central bank to raise rates from the rock-bottom level and hurt the stocks that outperformed in the low-rate environment.
Against this backdrop, below we highlight a few tech ETFs that stayed steady in the past five days. The key tech ETF Technology Select Sector SPDR Fund (XLK - Free Report) lost about 0.4% past week while VanEck Vectors Digital Transformation ETF (DAPP - Free Report) and Amplify Transformational Data Sharing ETF (BLOK - Free Report) lost about 8.7% and 7.3%, respectively.
ETFs in Focus
Direxion Moonshot Innovators ETF (MOON - Free Report) – Up 1.32%
The underlying S&P Kensho Moonshots Index comprises of 50 U.S. companies that pursue innovative technologies with the potential to disrupt existing technologies and have the highest early-stage composite innovation scores determined on a natural language processing review of the latest annual regulatory filing of the company for the use of words & phrases related to innovation. The fund charges 65 bps in fees.
Global X Cybersecurity ETF (BUG - Free Report) – Up 0.90%
The underlying Indxx Cybersecurity Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from the increased adoption of cybersecurity technology, including but not limited to companies whose principal business is in the development & management of security protocols preventing intrusion & attacks to systems, networks, applications, computers & mobile devices. The fund charges 50 bps in fees.
ETFMG Prime Cyber Security ETF (HACK - Free Report) – Up 0.83%
The underlying Prime Cyber Defense Index utilizes a rules-based investment methodology to select a diverse group of companies actively involved in the cyber security industry. The fund charges 60 bps in fees.
iShares Expanded Tech-Software Sector ETF (IGV - Free Report) – Up 0.5%
The underlying S&P North American Expanded Technology Software Index comprises North American equities in the software industry and select North American equities from interactive home entertainment and interactive media and services industries. The fund charges 46 bps in fees (read: Bet on Cash-Rich Tech ETFs & Stay Away From the Rout).
3D Printing ETF (PRNT - Free Report) – Up 0.4%
The underlying Total 3D-Printing Index comprises equity securities and depositary receipts of exchange listed companies from the U.S., non-U.S. developed markets & Taiwan that are engaged in 3D printing related businesses within the following business lines: 3D printing hardware, computer aided design & 3D printing simulation software, 3D printing centers, scanning & measurement and 3D printing materials. The fund charges 66 bps in fees.
Invesco S&P 500 Equal Weight Technology ETF – Up 0.1%
The underlying S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology sector of the S&P 500 Index. The fund charges 40 bps in fees.
First Trust NASDAQ CEA Cybersecurity ETF (CIBR - Free Report) – Up 0.1%
The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. The fund charges 60 bps in fees.
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 >>