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5 Tech ETFs Up At Least 18% in 1H Despite Sector's Muted Show
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The year 2021 has brought with it a rising rate trend (thanks to stimulus and vaccine optimism) and thus hatred for growth stocks. Since tech stocks are high-growth in nature, the tech-heavy Nasdaq (up 13.6%) has underperformed the S&P 500 (up 15.3%) this year. The key tech Technology Select Sector SPDR Fund (XLK - Free Report) just matched the S&P 500’s performance.
The ongoing economic recovery post pandemic has led to a surge in the 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.
Plus, FAANGs and other tech stocks got an occasional bashing mainly due to lofty valuations. The coronavirus outbreak could not take the sheen out of this sector, 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.
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.
The day of reckoning is coming for high-flying tech stocks, Wells Fargo warned, as quoted on CNBC. “The premium that you’re paying is still exceptionally high,” the firm’s head of equity strategy told CNBC’s “Trading Nation.”
Though benchmark treasury yields are still hovering at low levels, the strategist cautioned that a meaningful reversal is virtually inevitable, citing the fundamental economic backdrop. He expects such things to happen later this summer or early fall.
Against this backdrop, below we highlight a few tech ETFs that stayed steady this year and returned well above the biggest tech ETF XLK.
ETFs in Focus
Amplify Transformational Data Sharing ETF (BLOK - Free Report) – Up 35.4%
The Amplify Transformational Data Sharing ETF is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in the equity securities of companies actively involved in the development and utilization of transformational data sharing technologies. The fund charges 71 bps in fees.
The 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.
The underlying Dynamic Semiconductor Intellidex Index comprises stocks of semiconductor companies. The index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
The underlying BlueStar Quantum Computing and Machine Learning Index consists of a modified equal-weighted portfolio of the stock of companies whose products or services are predominantly tied to the development of quantum computing and machine learning technology. The fund charges 40 bps in fees.
iShares U.S. Technology ETF (IYW - Free Report) – Up 18.7%
The underlying Dow Jones U.S. Technology Capped Index includes companies in the following sectors: software and computer services and technology hardware and equipment. The index is capitalization-weighted and includes only companies in the technology industry of the Dow Jones U.S. Total Market Index. The fund charges 43 bps in fees.
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5 Tech ETFs Up At Least 18% in 1H Despite Sector's Muted Show
The year 2021 has brought with it a rising rate trend (thanks to stimulus and vaccine optimism) and thus hatred for growth stocks. Since tech stocks are high-growth in nature, the tech-heavy Nasdaq (up 13.6%) has underperformed the S&P 500 (up 15.3%) this year. The key tech Technology Select Sector SPDR Fund (XLK - Free Report) just matched the S&P 500’s performance.
The ongoing economic recovery post pandemic has led to a surge in the 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.
Plus, FAANGs and other tech stocks got an occasional bashing mainly due to lofty valuations. The coronavirus outbreak could not take the sheen out of this sector, 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.
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.
The day of reckoning is coming for high-flying tech stocks, Wells Fargo warned, as quoted on CNBC. “The premium that you’re paying is still exceptionally high,” the firm’s head of equity strategy told CNBC’s “Trading Nation.”
Though benchmark treasury yields are still hovering at low levels, the strategist cautioned that a meaningful reversal is virtually inevitable, citing the fundamental economic backdrop. He expects such things to happen later this summer or early fall.
Against this backdrop, below we highlight a few tech ETFs that stayed steady this year and returned well above the biggest tech ETF XLK.
ETFs in Focus
Amplify Transformational Data Sharing ETF (BLOK - Free Report) – Up 35.4%
The Amplify Transformational Data Sharing ETF is an actively managed ETF that seeks to provide total return by investing at least 80% of its net assets in the equity securities of companies actively involved in the development and utilization of transformational data sharing technologies. The fund charges 71 bps in fees.
3D Printing ETF (PRNT - Free Report) – Up 25%
The 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 Dynamic Semiconductors ETF (PSI - Free Report) – Up 20.1%
The underlying Dynamic Semiconductor Intellidex Index comprises stocks of semiconductor companies. The index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Defiance Quantum ETF (QTUM - Free Report) – Up 20.0%
The underlying BlueStar Quantum Computing and Machine Learning Index consists of a modified equal-weighted portfolio of the stock of companies whose products or services are predominantly tied to the development of quantum computing and machine learning technology. The fund charges 40 bps in fees.
iShares U.S. Technology ETF (IYW - Free Report) – Up 18.7%
The underlying Dow Jones U.S. Technology Capped Index includes companies in the following sectors: software and computer services and technology hardware and equipment. The index is capitalization-weighted and includes only companies in the technology industry of the Dow Jones U.S. Total Market Index. The fund charges 43 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 >>