For those looking to grow their wealth, exchange-traded funds (ETFs) often seem like a smart way to get involved in the investment world. ETFs are a financial product thatgets bought or sold on a stock exchange, just as a normal share might be – except that the asset or derivative asset isn’t itself a stock but something else, such asa stock index or a particular commodity.
Whole sectors can be traded as ETFs – and one of the busiest sectors in this regard is the technology field. However,for a newbie investor or someone only just beginning to learn about the world of tech ETFs, it can be hard to know where to start. This article will shed some light on the situation, and point you in the direction of some of the tech ETFs that you ought to be keeping an eye on.
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Technology Select Sector SPDR Fund
The Technology Select Sector SPDR Fund, which is known by its ticker XLK, is a smart choice for savvy investors. It follows, or ‘tracks’, the Technology Select Sector Index, which is headed up by two well-known firms and one less well-known one. Microsoft and Apple are the former, and the latter is Nvidia. Nvidia may seem like something of a risky bet given the lack of name recognition – and there is, of course, always an element of risk involved in any transaction, and fame isn’t a guarantee of success. However,Nvidia is certainly a reputable business with a lot going for it: it is known for being the inventor of the graphics processing unit (GPU), which powers computers and other devices all over the world.
S&P Technology Dividend Aristocrats ETF
The S&P Technology Dividend Aristocrats ETF, which is known by its ticker TDV, is a common choice among those who are looking for firms thathave a strong history of long-term growth. As top trading advisors at well-known companies such asCapital Markets Elite Group might tell you, there are pros and cons to investing in both newer and more well-established firms. Advisors like these, which offer trading platforms of their own, might say that newer firms can be a little less predictable but can hold the potential for lots of rapid growth. Older firms can be more predictable, but their growth may have passed. This ETF goes for firms thatare profitable and stable – companies such asBooz Allen Hamilton are represented.
First Trust Cloud Computing ETF
It’s also worth noting that many of the ETFs in the tech sector can delve deeply into specialist sub-areas of the industry. One of these is the First Trust Cloud Computing ETF, which is known by its ticker SKYY. This particular fund zooms in on the cloud computing sphere: cloud computing refers to the practice of hosting server data in an on-demand way, making it accessible from multiple places – rather than hosting it in one fixed, managed location.
The firms represented in the ETF are diverse. Some of them, such asAmazon, are multi-sector corporations and household names thatalso offer lots of other services. Others, such as Oracle, are all about software. However,what they have in common is that they focus in whole or in part on cloud computing, a practice that has seen a meteoric rise in investment interest in recent years.
ARK Innovation ETF
Finally, it’s also worth exploring ETFs such as the ARK Innovation ETF (or ARKK in its ticker format), which focuses on the so-called ‘disruptive’ side of the tech sector. Disruption is a word that is thrown around a lot in this sector, and to an outsider, it can seem like an undesirable trend. However, it’s often considered to be a positive thing given that disruption can cause realignments and new courses of actions – which can, in turn, be profitable.
In terms of numbers, this ETF has seen some strong performances in the last few months. Over the course of a one-year period, it has seen a stunning performance of 156.1%. While this, of course, doesn’t guarantee that the same performance will be replicated in the future, it does make it the sort of ETF that should be considered very carefully if you’re planning to expand your portfolio.
Overall, the technology ETF field is clearly something of a crowded one. There are all kinds of options here for investors to pick: from the S&P Technology Dividend Aristocrats ETF to the Technology Select Sector SPDR Fund, a whole host of companies and subsectors are represented. By doing your research or speaking to an expert in the field, you can get a fuller picture about the tech ETF sector – and make what will hopefully turn out to be good investment choices.
