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5 Tech ETFs That Outperformed XLK in the Past Week
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Wall Street has regained momentum to start November, with the Nasdaq Composite Index in the longest winning streak in two years. The renewed confidence is driven by a decline in Treasury yields, which has particularly favored technology stocks like Salesforce (CRM - Free Report) , Apple (AAPL - Free Report) , and Microsoft (MSFT - Free Report) (read: ETFs to Tap Microsoft's Longest Win Streak Since 2021).
While almost all the ETFs in the space gained handsomely in the past week, we have highlighted five that are leading the rally. These include ARK Innovation ETF (ARKK - Free Report) , ARK Next Generation Internet ETF (ARKW - Free Report) , First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) , Global X Blockchain ETF (BKCH - Free Report) and VanEck Vectors Digital Transformation ETF (DAPP - Free Report) .
The 10-Year Treasury yields dropped to 4.57%, boosting investor confidence, particularly in mega-cap growth stocks. This shift in the bond market reflects a broader investor sentiment that the Fed is nearing the end of its interest rate hiking cycle, which has been a critical concern for markets in the past few months.
Most traders are betting against a rate hike this year, with some expecting a rate cut by March. According to the CME FedWatch tool, 90% of traders are sticking with their bet that there won't be a hike this year, while 25% expect a rate cut in March. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low.
Further, the sector outlook remains solid. The expansion of artificial intelligence (AI) applications holds the promise of ushering in fresh opportunities for growth within the sector. The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby bolstering strength in the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally (read: 5 Sector ETFs at the Forefront of the Market Rally Last Week).
The tech titans have strong balance sheets, durable revenue streams and robust profit margins, making them attractive investments. They are better positioned to withstand a possible economic downturn and have demonstrated improved cost discipline.
Moreover, the technology sector has a solid Zacks Sector Rank, being in the top 25%, which suggests continued outperformance in the coming months.
Let’s dig into the details of the abovementioned ETFs:
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 32 securities in its basket, with some concentration on the top firms.
ARK Innovation ETF has gathered $7 billion in its asset base and charges 75 bps in fees per year from investors. It trades in average daily volume of 14 million shares.
ARK Next Generation Internet ETF (ARKW - Free Report) – Up 13.8%
ARK Next Generation Internet ETF is an actively managed fund focusing on companies expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 34 stocks in its basket.
ARK Next Generation Internet ETF has amassed $1.3 billion in its asset base and charges 88 bps in annual fees. It trades in an average daily volume of 262,000 shares.
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) – Up 11.3%
First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economies-related innovation. SkyBridge identifies securities primarily via “bottom up” research focused on finding companies leading in the crypto industry ecosystem.
First Trust SkyBridge Crypto Industry holds 30 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $20.2 million in its asset base and trades in an average daily volume of 176,000 shares (read: 5 ETFs at the Forefront of Bitcoin's Thrilling Ascent).
Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration. Global X Blockchain ETF holds 25 stocks in its basket, with nearly double-digit allocation to the four top firms.
Global X Blockchain ETF has gathered $70 million in its asset base and trades in an average daily volume of 124,000 shares. It charges 50 bps in annual fees.
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 9.2%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of 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. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 22 securities in its basket.
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 81,000. DAPP has accumulated $50.5 million in its asset base.
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5 Tech ETFs That Outperformed XLK in the Past Week
Wall Street has regained momentum to start November, with the Nasdaq Composite Index in the longest winning streak in two years. The renewed confidence is driven by a decline in Treasury yields, which has particularly favored technology stocks like Salesforce (CRM - Free Report) , Apple (AAPL - Free Report) , and Microsoft (MSFT - Free Report) (read: ETFs to Tap Microsoft's Longest Win Streak Since 2021).
While almost all the ETFs in the space gained handsomely in the past week, we have highlighted five that are leading the rally. These include ARK Innovation ETF (ARKK - Free Report) , ARK Next Generation Internet ETF (ARKW - Free Report) , First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) , Global X Blockchain ETF (BKCH - Free Report) and VanEck Vectors Digital Transformation ETF (DAPP - Free Report) .
The 10-Year Treasury yields dropped to 4.57%, boosting investor confidence, particularly in mega-cap growth stocks. This shift in the bond market reflects a broader investor sentiment that the Fed is nearing the end of its interest rate hiking cycle, which has been a critical concern for markets in the past few months.
Most traders are betting against a rate hike this year, with some expecting a rate cut by March. According to the CME FedWatch tool, 90% of traders are sticking with their bet that there won't be a hike this year, while 25% expect a rate cut in March. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for initiatives when interest rates are low.
Further, the sector outlook remains solid. The expansion of artificial intelligence (AI) applications holds the promise of ushering in fresh opportunities for growth within the sector. The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby bolstering strength in the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally (read: 5 Sector ETFs at the Forefront of the Market Rally Last Week).
The tech titans have strong balance sheets, durable revenue streams and robust profit margins, making them attractive investments. They are better positioned to withstand a possible economic downturn and have demonstrated improved cost discipline.
Moreover, the technology sector has a solid Zacks Sector Rank, being in the top 25%, which suggests continued outperformance in the coming months.
Let’s dig into the details of the abovementioned ETFs:
ARK Innovation ETF (ARKK - Free Report) – Up 16.6%
ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA Technologies and Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet and Fintech Innovation. In total, the fund holds 32 securities in its basket, with some concentration on the top firms.
ARK Innovation ETF has gathered $7 billion in its asset base and charges 75 bps in fees per year from investors. It trades in average daily volume of 14 million shares.
ARK Next Generation Internet ETF (ARKW - Free Report) – Up 13.8%
ARK Next Generation Internet ETF is an actively managed fund focusing on companies expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 34 stocks in its basket.
ARK Next Generation Internet ETF has amassed $1.3 billion in its asset base and charges 88 bps in annual fees. It trades in an average daily volume of 262,000 shares.
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) – Up 11.3%
First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economies-related innovation. SkyBridge identifies securities primarily via “bottom up” research focused on finding companies leading in the crypto industry ecosystem.
First Trust SkyBridge Crypto Industry holds 30 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $20.2 million in its asset base and trades in an average daily volume of 176,000 shares (read: 5 ETFs at the Forefront of Bitcoin's Thrilling Ascent).
Global X Blockchain ETF (BKCH - Free Report) – Up 10.5%
Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration. Global X Blockchain ETF holds 25 stocks in its basket, with nearly double-digit allocation to the four top firms.
Global X Blockchain ETF has gathered $70 million in its asset base and trades in an average daily volume of 124,000 shares. It charges 50 bps in annual fees.
VanEck Vectors Digital Transformation ETF (DAPP - Free Report) – Up 9.2%
VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of 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. VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 22 securities in its basket.
VanEck Vectors Digital Transformation ETF charges 50 bps in annual fees and trades in an average daily volume of 81,000. DAPP has accumulated $50.5 million in its asset base.