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Technology has been the best-performing sector this year with the ultra-popular Select Sector SPDR Technology ETF (XLK - Free Report) climbing 45.8% versus the gain of 28.7% for the broad market fund SPDR S&P 500 (SPY - Free Report) . The bullish trend is likely to strengthen this Christmas especially since the U.S.-China phase one trade deal has eased trade war tensions (read: Be Thankful to These Outperforming Sector ETFs This Year).
China committed to buy $40 billion of American agricultural products annually, tighten measures for protecting American intellectual property, and stop forcing American companies to transfer their technology when doing business in China. In return, Trump has agreed to halt the planned tariffs on $156 billion of Chinese goods that is due to take effect on Dec 15 and will also cut the tariffs from 15% to 7.5% on $120 billion of Chinese goods that were imposed in September. However, the 25% tariff on $250 billion of Chinese imports imposed in March 2018 will remain in place.
Further, holiday optimism is expected to drive tech stocks higher on a digital shopping spree. New video streaming services, more 4K Ultra HD content and larger screens on TVs and smartphones are putting entertainment on gift lists this holiday. Screens like laptops, smartphones and TVs will top gift lists followed by the fast-growing emerging tech categories like smart home devices and wearables.
According to the Consumer Technology Association (CTA), U.S. technology spending during the 2019 holiday season (October–December) is expected to reach a $97.1 billion, on par with last year. About 71% of the holiday shoppers are likely to buy content-related gifts like video games (43%) and subscriptions to services like Netflix (NFLX - Free Report) or Hulu (39%) (read: Make the Most of this Holiday Season With These ETFs).
Given the bullish holiday outlook, the tech sector appears a compelling last-minute investment. As such, we have highlighted a few tech ETFs that could see surge this Christmas:
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. It is concentrated on the top firms with none accounting for less than 9% of assets. The fund has amassed $2.3 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 519,000 shares a day and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
This ETF has accumulated around $449.5 million in its asset base since Apr 12. It seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The fund tracks the Indxx Global Cloud Computing Index, holding 37 securities in its basket, with none accounting for no more than 4.73% share. It charges 68 bps in annual fees and trades in a good volume of about 245,000 shares per day on average (read: Why These ETFs Under $20 Seem Solid Picks for 2020).
This ETF offers investors exposure to companies engaged in the research & development or commercialization of systems and materials used in 5G communications. It follows the BlueStar 5G Communications Index, charging investors 30 bps in annual fees. The product has amassed $139.6 million in its asset base and trades in average daily volume of 68,000 shares (read: 5G ETFs: Invest in the Next Generation Wireless Technology).
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 33 stocks with concentration on the top firm at 14.4% allocation. The fund has AUM of $410.8 million and trades in a volume of 115,000 shares a day on average. It charges 68 bps in annual fees.
This fund follows the Indxx Global Internet of Things Thematic Index and provides exposure to companies that stand to benefit from the broader adoption of the Internet of Things (IoT) as enabled by technologies such as WiFi, 5G telecommunications infrastructure, and fiber optics. This includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial Internet. Holding 51 stocks, it is moderately concentrated across components with each holding less than 8.2% of assets. The product has accumulated $138 million in AUM and sees average daily volume of around 36,000 shares. Expense ratio comes in at 0.68% (read: Tech Heads for Best Year in Decade: 5 Best ETFs, Stocks).
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5 Solid Tech ETFs to Buy for Christmas
Technology has been the best-performing sector this year with the ultra-popular Select Sector SPDR Technology ETF (XLK - Free Report) climbing 45.8% versus the gain of 28.7% for the broad market fund SPDR S&P 500 (SPY - Free Report) . The bullish trend is likely to strengthen this Christmas especially since the U.S.-China phase one trade deal has eased trade war tensions (read: Be Thankful to These Outperforming Sector ETFs This Year).
China committed to buy $40 billion of American agricultural products annually, tighten measures for protecting American intellectual property, and stop forcing American companies to transfer their technology when doing business in China. In return, Trump has agreed to halt the planned tariffs on $156 billion of Chinese goods that is due to take effect on Dec 15 and will also cut the tariffs from 15% to 7.5% on $120 billion of Chinese goods that were imposed in September. However, the 25% tariff on $250 billion of Chinese imports imposed in March 2018 will remain in place.
Further, holiday optimism is expected to drive tech stocks higher on a digital shopping spree. New video streaming services, more 4K Ultra HD content and larger screens on TVs and smartphones are putting entertainment on gift lists this holiday. Screens like laptops, smartphones and TVs will top gift lists followed by the fast-growing emerging tech categories like smart home devices and wearables.
According to the Consumer Technology Association (CTA), U.S. technology spending during the 2019 holiday season (October–December) is expected to reach a $97.1 billion, on par with last year. About 71% of the holiday shoppers are likely to buy content-related gifts like video games (43%) and subscriptions to services like Netflix (NFLX - Free Report) or Hulu (39%) (read: Make the Most of this Holiday Season With These ETFs).
Given the bullish holiday outlook, the tech sector appears a compelling last-minute investment. As such, we have highlighted a few tech ETFs that could see surge this Christmas:
iShares PHLX Semiconductor ETF (SOXX - Free Report)
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. It is concentrated on the top firms with none accounting for less than 9% of assets. The fund has amassed $2.3 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 519,000 shares a day and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Global X Cloud Computing ETF (CLOU - Free Report)
This ETF has accumulated around $449.5 million in its asset base since Apr 12. It seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The fund tracks the Indxx Global Cloud Computing Index, holding 37 securities in its basket, with none accounting for no more than 4.73% share. It charges 68 bps in annual fees and trades in a good volume of about 245,000 shares per day on average (read: Why These ETFs Under $20 Seem Solid Picks for 2020).
Defiance Next Gen Connectivity ETF (FIVG - Free Report)
This ETF offers investors exposure to companies engaged in the research & development or commercialization of systems and materials used in 5G communications. It follows the BlueStar 5G Communications Index, charging investors 30 bps in annual fees. The product has amassed $139.6 million in its asset base and trades in average daily volume of 68,000 shares (read: 5G ETFs: Invest in the Next Generation Wireless Technology).
Global X FinTech ETF (FINX - Free Report)
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 33 stocks with concentration on the top firm at 14.4% allocation. The fund has AUM of $410.8 million and trades in a volume of 115,000 shares a day on average. It charges 68 bps in annual fees.
Global X Internet of Things ETF (SNSR - Free Report)
This fund follows the Indxx Global Internet of Things Thematic Index and provides exposure to companies that stand to benefit from the broader adoption of the Internet of Things (IoT) as enabled by technologies such as WiFi, 5G telecommunications infrastructure, and fiber optics. This includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial Internet. Holding 51 stocks, it is moderately concentrated across components with each holding less than 8.2% of assets. The product has accumulated $138 million in AUM and sees average daily volume of around 36,000 shares. Expense ratio comes in at 0.68% (read: Tech Heads for Best Year in Decade: 5 Best ETFs, Stocks).
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 >>