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Forget Sector Rotation: Tech ETFs to Rule in Christmas Week
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Wall Street has been brimming with optimism on vaccine and stimulus hopes since November. Amid rising virus cases in America, COVID-19 immunization had started. Pfizer’s PFE) first shots, developed in collaboration with the German biotechnology company BioNTech (BNTX - Free Report) is being applied to health workers and nursing home residents.
On the other hand, Democratic and Republican leaders lately clinched an agreement on a new coronavirus relief deal worth around $900 billion that comprises a second round of stimulus checks and further unemployment benefits. The bill will soon be up for a vote in the House and the Senate.
No Sector Rotation Expected in Christmas
While the above-mentioned scenario has set the stage for a sector rotation, latest news on the outbreak of a new coronavirus strain (which is reportedly several times more infectious than the initial strain)in the UK has played foul in the markets lately.
In fact, New York City has already ordered people flying into the city from the UK to prove themselves Covid-19 negative. The latest virus news and further lockdown fears have hurt economically sensitive sectors and stocks.
Although vaccine hopes finally more than made up for the newfound pessimism in the global markets (especially after experts showed hopes that the current Covid-19 vaccine should show notable efficacy in treating this new strain), one thing is sure: the Christmas week will be ruled by the tech sector, which is the real winner of the pandemic.
So far the year has rewarded tech stocks greatly. The coronavirus outbreak could not take the sheen out of this sector but has rather added more to it. 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. No wonder, Technology Select Sector SPDR Fund (XLK - Free Report) is up about 40% this year versus 15.2% gains in the S&P 500.
A massive cyber attack, targeting as many as 18,000 U.S. companies and government agencies, was unearthed recently. The news brightened the appeal for a specific corner for tech sector — cyber security — even more (read: Cybersecurity Stocks & ETFs Soar after Massive Hack).
If these were not enough, Apple (AAPL - Free Report) said it is foraying into the electric vehicle segment. Apple said this will have a brand new battery technology, and plans to deliver its first EV sometime in 2024. EV is a booming segment in the world led by Tesla (TSLA). Apple’s entry in the field will make the space more appealing.
Against this backdrop, below we highlight a few tech ETFs that could act as Santa Claus for ones portfolio this Christmas.
The underlying Indxx Cybersecurity Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from 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.
Companies in ARKQ are focused on and are expected to substantially benefit from the development of new products or services, technological improvements and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. It charges 75 bps in fees.
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The fund charges 13 bps in fees.
The underlying ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry. The fund charges 60 bps in fees.
Dynamic Software Invesco ETF
The underlying Dynamic Software Intellidex Index comprises stocks of software companies. The index is designed to provide capital appreciation by evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. The fund charges 56 bps in fees.
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Forget Sector Rotation: Tech ETFs to Rule in Christmas Week
Wall Street has been brimming with optimism on vaccine and stimulus hopes since November. Amid rising virus cases in America, COVID-19 immunization had started. Pfizer’s PFE) first shots, developed in collaboration with the German biotechnology company BioNTech (BNTX - Free Report) is being applied to health workers and nursing home residents.
Another company — Moderna (MRNA - Free Report) — has also received FDA authorization for emergency use against COVID-19 in individuals 18 years of age or older (read: 5 Best Small-Cap ETFs as Russell 2000 Tops S&P 500 YTD).
On the other hand, Democratic and Republican leaders lately clinched an agreement on a new coronavirus relief deal worth around $900 billion that comprises a second round of stimulus checks and further unemployment benefits. The bill will soon be up for a vote in the House and the Senate.
No Sector Rotation Expected in Christmas
While the above-mentioned scenario has set the stage for a sector rotation, latest news on the outbreak of a new coronavirus strain (which is reportedly several times more infectious than the initial strain)in the UK has played foul in the markets lately.
In fact, New York City has already ordered people flying into the city from the UK to prove themselves Covid-19 negative. The latest virus news and further lockdown fears have hurt economically sensitive sectors and stocks.
Although vaccine hopes finally more than made up for the newfound pessimism in the global markets (especially after experts showed hopes that the current Covid-19 vaccine should show notable efficacy in treating this new strain), one thing is sure: the Christmas week will be ruled by the tech sector, which is the real winner of the pandemic.
So far the year has rewarded tech stocks greatly. The coronavirus outbreak could not take the sheen out of this sector but has rather added more to it. 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. No wonder, Technology Select Sector SPDR Fund (XLK - Free Report) is up about 40% this year versus 15.2% gains in the S&P 500.
A massive cyber attack, targeting as many as 18,000 U.S. companies and government agencies, was unearthed recently. The news brightened the appeal for a specific corner for tech sector — cyber security — even more (read: Cybersecurity Stocks & ETFs Soar after Massive Hack).
If these were not enough, Apple (AAPL - Free Report) said it is foraying into the electric vehicle segment. Apple said this will have a brand new battery technology, and plans to deliver its first EV sometime in 2024. EV is a booming segment in the world led by Tesla (TSLA). Apple’s entry in the field will make the space more appealing.
Against this backdrop, below we highlight a few tech ETFs that could act as Santa Claus for ones portfolio this Christmas.
Global X Cybersecurity ETF (BUG - Free Report)
The underlying Indxx Cybersecurity Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from 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.
Ark Autonomous Tech & Robotics ETF (ARKQ - Free Report)
Companies in ARKQ are focused on and are expected to substantially benefit from the development of new products or services, technological improvements and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. It charges 75 bps in fees.
Technology Select Sector SPDR Fund (XLK - Free Report)
The underlying Technology Select Sector Index includes companies from the following industries: computers & peripherals; software; diversified telecommunication services; communications equipment; semiconductor & semiconductor equipment; internet software & services; IT services; wireless telecommunication services; electronic equipment & instruments; and office electronics. The fund charges 13 bps in fees.
First Trust Cloud Computing ETF (SKYY - Free Report)
The underlying ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry. The fund charges 60 bps in fees.
Dynamic Software Invesco ETF
The underlying Dynamic Software Intellidex Index comprises stocks of software companies. The index is designed to provide capital appreciation by evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors. The fund charges 56 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 >>