ETFs: Top Performing Technology ETFs to Consider

Introduction

Exchange-traded funds (ETFs) are a type of investment fund that can be traded on a stock exchange. They are similar to mutual funds, but ETFs are more flexible and come with lower management fees. ETFs are available in a variety of asset classes, including stocks, bonds, and currencies, and can be used to gain exposure to different sectors, industries, and global markets.

Types of ETFs

ETFs can be divided into different categories based on the type of underlying asset. Sector ETFs invest in selected industries, such as energy or banking, while bond ETFs invest in a collection of fixed-income securities. Currency ETFs invest in different currencies, and commodity ETFs invest in commodities such as gold, oil, and agricultural products.

Overview of ETF Issuers

The ETF market is dominated by a handful of companies that issue ETFs. These companies include BlackRock, Vanguard, and State Street, among others. These issuers are responsible for creating, managing, and marketing ETFs, and receive fees from the funds’ investors in exchange for their services.

Role of ETF Sponsors

ETF sponsors play an important role in the ETF market. They are responsible for creating and managing both the ETFs and the underlying portfolios, as well as providing ongoing support and services. They also work with the funds’ investors to ensure that the ETFs are meeting their stated objectives.

Top Performing Technology ETFs

Some of the top performing technology ETFs include the iShares U.S. Technology ETF (IYW), the Vanguard Information Technology ETF (VGT), and the Invesco QQQ ETF (QQQ). All three of these ETFs have low expense ratios and are designed to provide exposure to the technology sector.

IGV iShares Expanded Tech-Software Sector ETF

IGV, or the iShares North American Tech-Software ETF, is an exchange-traded fund that provides diverse exposure to the North American software industry. The fund aims to provide more diverse exposure to a concentrated industry by capping individual security weights at 8.5%. This allows the fund to redistribute its portfolio away from tech giants and into smaller, more growth-oriented software companies. The fund includes Canadian firms, but they make up only a small portion of the portfolio. This approach is suitable for investors who want exposure to the software industry with subdued concentrations.

The fund changed indexes on December 24, 2018, and the new index is functionally identical but includes specific companies by name, such as Activision Blizzard, EA, Snap, Take-Two Interactive, and Zynga. These companies were reclassified into the new Communications Services sector at the end of 2018 and would otherwise have been removed from the fund. The stocks are reviewed semiannually in June and December and weight capping is applied quarterly starting in March.

The IGV portfolio data shows a weighted average market cap of $241.25 billion, a Price/Earnings ratio of 88.04, a Price/Book ratio of 7.12, a Distribution Yield of 0.01%, and a next ex-dividend date of 03/23/23. The fund has 115 holdings.

The top 10 holdings of the IGV fund are Salesforce, Inc. (8.93%), Adobe Incorporated (8.75%), Oracle Corporation (7.95%), Microsoft Corporation (7.88%), Intuit Inc. (6.52%), ServiceNow, Inc. (5.16%), Activision Blizzard, Inc. (3.09%), Synopsys, Inc. (3.08%), Cadence Design Systems, Inc. (2.88%), and Roper Technologies, Inc. (2.73%).

iShares North American Tech-Multimedia Networking ETF (IGN)

IGN is an exchange-traded fund (ETF) that offers exposure to the communications equipment sector, as defined by the Global Industry Classification Standard (GICS) sector classification scheme. The fund is the first of its kind on the market, focusing specifically on multimedia networking companies. The fund limits its holdings to companies listed on US exchanges, making it a US-centric portfolio but still covering Canada. The fund invests across the broad market-cap spectrum and caps its holdings at 8.5%, limiting its exposure to larger companies. The index is rebalanced semi-annually.

The portfolio data of IGN shows a weighted average market cap of $29.00 billion, a Price/Earnings ratio of 65.17, a Price/Book ratio of 3.63, a Distribution Yield of 0.30%, and a next ex-dividend date of 03/23/23. The fund has 22 holdings.

The top 10 holdings of the IGN fund are Juniper Networks, Inc. (8.69%), Cisco Systems, Inc. (8.59%), F5, Inc. (8.49%), Arista Networks, Inc. (8.37%), Motorola Solutions, Inc. (8.36%), ViaSat, Inc. (5.57%), Lumentum Holdings, Inc. (4.93%), Viavi Solutions Inc. (4.72%), Ciena Corporation (4.52%), and CommScope Holding Co., Inc. (4.44%).

AXS Short Innovation Daily ETF (SARK)

SARK is an exchange-traded fund (ETF) that provides daily 1x inverse exposure to ARKK, an ETF composed of companies globally involved with, or that benefit from, disruptive innovation. The fund is a daily bet against the performance of ARKK, which typically consists of 30-55 stocks selected based on high conviction in this space. As such, SARK may counterbalance an existing portfolio of high-growth stocks during a market decline in the space, but risks losing value if and when the underlying fund’s price rises.

The fund’s strategy involves entering into swap agreements with global financial institutions, exchanging returns based on the performance of ARKK shares. To achieve maximum results, the fund may also invest in fixed income securities with investment-grade rating including Treasuries, short-term bond ETFs, corporate bonds, and money market funds as collateral required by the fund’s counterparties.

SARK is a leveraged inverse product with a -1x factor that resets daily. It is not a buy-and-hold investment and should not be expected to provide index leverage return greater than a one-day period. The fund traded under the name Tuttle Capital Short Innovation ETF prior to August 5, 2022.

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