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The technology sector was the lone bright spot last week among the 11 S&P 500 sectors amid the market turmoil with the S&P 500 Information Technology Sector gaining 0.09%. Optimism surrounding the economic recovery compelled investors to bet on the growth stocks.
The Fed in its recent FOMC meeting stated that rapid vaccinations have reduced the spread of COVID-19 in the United States, strengthening economic activity and employment. As such, it raised GDP growth from 6.5% to 7% for this year, the fastest calendar-year expansion since 1984. The strong economy will continue to fuel demand in the sector. However, the signals of rate hike sooner-than-expected have not deterred the tech stocks as investors believe that low interest rates will remain in place for at least more than a year and provide a huge boost to the sector.
Further, 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).
Given this, we have highlighted five ETFs that led the tech strength last week. Investors seeking to benefit from the renewed confidence in the tech sector could find them encouraging picks:
Simplify Volt Cloud and Cybersecurity Disruption ETF – Up 7.3%
This thematic investment product is actively managed and designed to concentrate on those few disruptive companies that are poised to dominate the new era of the cloud and then enhance the concentrated exposure with options. It holds 21 securities in its basket with the largest allocation to the top three firms that collectively make up for 71% of the total assets. The ETF is a high-cost choice, charging 1.02% in annual fees. It has accumulated $3.4 million in its assets since its inception in late December and trades in an average daily volume of 9,000 shares.
WisdomTree Cloud Computing Fund (WCLD - Free Report) – Up 5.3%
This ETF offers exposure to emerging and fast-growing U.S.-listed companies (including ADRs) that are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 58 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $1.2 billion in its asset base and trades in an average daily volume of 346,000 shares. It has a Zacks ETF Rank #3 (Hold).
Wisdomtree Cybersecurity Fund (WCBR - Free Report) – Up 2.6%
This fund has newly debuted in the space and has attracted $23.8 million in its asset base in just six months. It targets exposure to companies driving innovation in cybersecurity technologies by tracking the WisdomTree Team8 Cybersecurity Index. The ETF holds 25 stocks in its basket with each accounting for less than 6.7% share. It charges 45 bps in annual fees and trades in an average daily volume of 15,000 shares (read: Proofpoint to Go Private: Cybersecurity ETFs Surge).
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 2.4%
This new ETF aims to offer exposure to the companies that are at the forefront of the digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. The fund tracks the MVIS Global Digital Assets Equity Index and holds 25 securities in its basket. It charges 65 bps in annual fees and trades in an average daily volume of 62,000. DAPP has accumulated $30.6 million in its asset base since its debut in April (read: 7 Tech ETFs That Survived the Recent Turmoil).
This product invests in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. It follows the Indxx Global FinTech Thematic Index, holding 39 stocks with concentration on the top firm at 8.7% allocation. The fund has AUM of $1.3 billion and trades in a volume of 188,000 shares a day on average. It charges 68 bps in annual fees.
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5 ETFs at the Heart of Last Week's Tech Strength
The technology sector was the lone bright spot last week among the 11 S&P 500 sectors amid the market turmoil with the S&P 500 Information Technology Sector gaining 0.09%. Optimism surrounding the economic recovery compelled investors to bet on the growth stocks.
The Fed in its recent FOMC meeting stated that rapid vaccinations have reduced the spread of COVID-19 in the United States, strengthening economic activity and employment. As such, it raised GDP growth from 6.5% to 7% for this year, the fastest calendar-year expansion since 1984. The strong economy will continue to fuel demand in the sector. However, the signals of rate hike sooner-than-expected have not deterred the tech stocks as investors believe that low interest rates will remain in place for at least more than a year and provide a huge boost to the sector.
Further, 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).
Given this, we have highlighted five ETFs that led the tech strength last week. Investors seeking to benefit from the renewed confidence in the tech sector could find them encouraging picks:
Simplify Volt Cloud and Cybersecurity Disruption ETF – Up 7.3%
This thematic investment product is actively managed and designed to concentrate on those few disruptive companies that are poised to dominate the new era of the cloud and then enhance the concentrated exposure with options. It holds 21 securities in its basket with the largest allocation to the top three firms that collectively make up for 71% of the total assets. The ETF is a high-cost choice, charging 1.02% in annual fees. It has accumulated $3.4 million in its assets since its inception in late December and trades in an average daily volume of 9,000 shares.
WisdomTree Cloud Computing Fund (WCLD - Free Report) – Up 5.3%
This ETF offers exposure to emerging and fast-growing U.S.-listed companies (including ADRs) that are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 58 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $1.2 billion in its asset base and trades in an average daily volume of 346,000 shares. It has a Zacks ETF Rank #3 (Hold).
Wisdomtree Cybersecurity Fund (WCBR - Free Report) – Up 2.6%
This fund has newly debuted in the space and has attracted $23.8 million in its asset base in just six months. It targets exposure to companies driving innovation in cybersecurity technologies by tracking the WisdomTree Team8 Cybersecurity Index. The ETF holds 25 stocks in its basket with each accounting for less than 6.7% share. It charges 45 bps in annual fees and trades in an average daily volume of 15,000 shares (read: Proofpoint to Go Private: Cybersecurity ETFs Surge).
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 2.4%
This new ETF aims to offer exposure to the companies that are at the forefront of the digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. The fund tracks the MVIS Global Digital Assets Equity Index and holds 25 securities in its basket. It charges 65 bps in annual fees and trades in an average daily volume of 62,000. DAPP has accumulated $30.6 million in its asset base since its debut in April (read: 7 Tech ETFs That Survived the Recent Turmoil).
Global X FinTech ETF (FINX - Free Report) – Up 2.3%
This product invests in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. It follows the Indxx Global FinTech Thematic Index, holding 39 stocks with concentration on the top firm at 8.7% allocation. The fund has AUM of $1.3 billion and trades in a volume of 188,000 shares a day on average. It charges 68 bps in annual 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 >>