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The technology sector is on fire given a deluge of upbeat earnings results and high hopes of the tax reform getting clearance. In particular, five technology stocks, touted as FAAMG – Facebook , Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , and Alphabet (GOOGL - Free Report) – led to skyrocketing prices.
Total earnings from 85% of the sector’s total market capitalization reported so far are up 22.4% on 9.3% higher revenues with 81.8% of the companies beating on earnings and 86.4% exceeding top-line estimates. While the beat ratios are in line with the last reported quarter, the growth rates are encouraging and higher than the recent quarters.
Trump’s proposed tax reform policy, which could allow companies to bring back cash held overseas at lower rates, are fueling exceptional growth in the sector. Per Moody’s, the top five U.S. hoarders are from the technology sector, namely Apple, Microsoft, Alphabet, Cisco (CSCO - Free Report) and Oracle (ORCL, which hold 88% of their money overseas.
Further, the buzz that communications’ chipmaker Broadcom (AVGO) is looking to make a bid of more than $100 billion for the smartphone chip supplier Qualcomm (QCOM - Free Report) . The combination would mark the biggest technology acquisition in history. This has triggered further rally in the semiconductor stocks.
If these aren’t enough, the sector has a solid Zacks Rank in the top 25%, suggesting robust growth prospects in the coming months (see: all the Technology ETFs here).
Given this, tech ETFs have been hitting all-time highs in recent trading sessions, easily crushing PowerShares QQQ (QQQ - Free Report) by a wide margin in the past 10 days. Below, we have presented a bunch of those that will continue to outperform in the coming months given that these have potentially superior weighting methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
This ETF targets the semiconductor corner of the broad tech space and follows the PHLX SOX Semiconductor Sector Index. It is a home to 30 securities charging investors 48 bps in annual fees. The fund has amassed $1.2 billion in its asset base and trades in a solid average volume of around 478,000 shares a day. It has a Zacks ETF Rank #1.
This fund provides exposure to 26 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product has managed assets worth $989.6 million and charges 36 bps in annual fees and expenses. It is heavily traded with a volume of around 3.2 million shares per day and has a Zacks ETF Rank #1.
This ETF also offers broad exposure to technology stocks by tracking the Dow Jones U.S. Technology Index and holds 142 stocks in its basket. The fund has AUM of more than $4 billion and charges 44 bps in fees and expenses. It has a Zacks ETF Rank #1 (read: 5 Red Hot Tech Stocks That Sent S&P 500 ETF Higher).
This fund targets the broad technology sector and follows the MSCI US Investable Market Information Technology 25/50 Index. It holds 361 stocks in its basket with AUM of $16.2 billion. VGT is the low choice in the space, charging just 10 bps in annual fees while volume is good at nearly 465,000 shares a day. The product has a Zacks ETF Rank #2.
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to 283 electronics, computer software and hardware, and informational technology companies. The fund has AUM of $1.3 billion and charges 48 bps in annual fees. It trades in a light volume of nearly 28,000 shares in hand a day and has a Zacks ETF Rank #2 (read: Tech ETFs to Soar on Microsoft's Blockbuster Earnings Beat).
MSCI Information Technology Index ETF FTEC – Up 4.2%
This fund is home to 358 technology stocks with AUM of $1.3 billion. It follows the MSCI USA IMI Information Technology Index. The ETF has 0.08% in expense ratio while volume is good at 191,000 shares a day. It has a Zacks ETF Rank #2.
XLK is the ultra-popular technology ETF with AUM of $19.1 billion and average daily volume of 10.2 million shares. It follows the Technology Select Sector Index and holds a basket of 72 stocks. The fund charges 14 bps in annual fees from investors and has a Zacks ETF Rank #2 (read: Top ETF Stories of October 2017).
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7 Top-Ranked Tech ETFs on Unstoppable Rally
The technology sector is on fire given a deluge of upbeat earnings results and high hopes of the tax reform getting clearance. In particular, five technology stocks, touted as FAAMG – Facebook , Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , and Alphabet (GOOGL - Free Report) – led to skyrocketing prices.
Additionally, a string of reports from other tech players like International Business Machines (IBM - Free Report) , and Intel (INTC - Free Report) added to the strength (read: Play IBM's Turnaround Story With These ETFs).
Total earnings from 85% of the sector’s total market capitalization reported so far are up 22.4% on 9.3% higher revenues with 81.8% of the companies beating on earnings and 86.4% exceeding top-line estimates. While the beat ratios are in line with the last reported quarter, the growth rates are encouraging and higher than the recent quarters.
Trump’s proposed tax reform policy, which could allow companies to bring back cash held overseas at lower rates, are fueling exceptional growth in the sector. Per Moody’s, the top five U.S. hoarders are from the technology sector, namely Apple, Microsoft, Alphabet, Cisco (CSCO - Free Report) and Oracle (ORCL, which hold 88% of their money overseas.
Further, the buzz that communications’ chipmaker Broadcom (AVGO) is looking to make a bid of more than $100 billion for the smartphone chip supplier Qualcomm (QCOM - Free Report) . The combination would mark the biggest technology acquisition in history. This has triggered further rally in the semiconductor stocks.
If these aren’t enough, the sector has a solid Zacks Rank in the top 25%, suggesting robust growth prospects in the coming months (see: all the Technology ETFs here).
Given this, tech ETFs have been hitting all-time highs in recent trading sessions, easily crushing PowerShares QQQ (QQQ - Free Report) by a wide margin in the past 10 days. Below, we have presented a bunch of those that will continue to outperform in the coming months given that these have potentially superior weighting methodologies and a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).
iShares PHLX Semiconductor ETF SOXX – Up 5.7%
This ETF targets the semiconductor corner of the broad tech space and follows the PHLX SOX Semiconductor Sector Index. It is a home to 30 securities charging investors 48 bps in annual fees. The fund has amassed $1.2 billion in its asset base and trades in a solid average volume of around 478,000 shares a day. It has a Zacks ETF Rank #1.
VanEck Vectors Semiconductor ETF (SMH - Free Report) – Up 4.6%
This fund provides exposure to 26 securities by tracking the MVIS US Listed Semiconductor 25 Index. The product has managed assets worth $989.6 million and charges 36 bps in annual fees and expenses. It is heavily traded with a volume of around 3.2 million shares per day and has a Zacks ETF Rank #1.
iShares Dow Jones US Technology ETF IYW – Up 4.6%
This ETF also offers broad exposure to technology stocks by tracking the Dow Jones U.S. Technology Index and holds 142 stocks in its basket. The fund has AUM of more than $4 billion and charges 44 bps in fees and expenses. It has a Zacks ETF Rank #1 (read: 5 Red Hot Tech Stocks That Sent S&P 500 ETF Higher).
Vanguard Information Technology ETF VGT – Up 4.2%
This fund targets the broad technology sector and follows the MSCI US Investable Market Information Technology 25/50 Index. It holds 361 stocks in its basket with AUM of $16.2 billion. VGT is the low choice in the space, charging just 10 bps in annual fees while volume is good at nearly 465,000 shares a day. The product has a Zacks ETF Rank #2.
iShares North American Tech ETF IGM – Up 4.2%
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to 283 electronics, computer software and hardware, and informational technology companies. The fund has AUM of $1.3 billion and charges 48 bps in annual fees. It trades in a light volume of nearly 28,000 shares in hand a day and has a Zacks ETF Rank #2 (read: Tech ETFs to Soar on Microsoft's Blockbuster Earnings Beat).
MSCI Information Technology Index ETF FTEC – Up 4.2%
This fund is home to 358 technology stocks with AUM of $1.3 billion. It follows the MSCI USA IMI Information Technology Index. The ETF has 0.08% in expense ratio while volume is good at 191,000 shares a day. It has a Zacks ETF Rank #2.
Select Sector SPDR Technology ETF (XLK - Free Report) – Up 4%
XLK is the ultra-popular technology ETF with AUM of $19.1 billion and average daily volume of 10.2 million shares. It follows the Technology Select Sector Index and holds a basket of 72 stocks. The fund charges 14 bps in annual fees from investors and has a Zacks ETF Rank #2 (read: Top ETF Stories of October 2017).
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 >>