On a global scale, the technology industry is worth trillions. Technology exchange-traded funds (ETFs) offer investors a way to tap into that wealth.
The technology space is huge, and breakthrough innovations such as artificial intelligence, cloud computing, fintech and robotics are adding further growth opportunities to this market.
However, the technology arena is also a highly competitive landscape, and emerging technology companies that are here today might be gone tomorrow. The volatile nature of this space can make investing in technology stocks a risky gamble.
Technology ETFs continue to be a popular alternative investment strategy that investors can use to gain exposure to tech stocks. ETF shares offer market participants new avenues for stock and bond investing, while providing lower expenses and easier access to the financial services industry.
From value to growth investment styles, many different investment objectives can be targeted across the plethora of technology ETFs available on the market. These investment vehicles also provide the option to enter mutual funds or individual technology stocks, or to participate in initial public offerings.
There are 92 technology ETFs, as per data from ETFdb.com. Here the Investing News Network looks at five of the top options by assets under management; all numbers were current as of June 9, 2021.
1. Invesco QQQ Trust (NASDAQ:QQQ)
Assets under management: US$160.02 billion
The first technology ETF on this list is the Invesco QQQ Trust, which offers investors exposure to tech stocks on the NASDAQ. According to ETFdb.com, this is one of the most popular ETF products. It’s also the second longest lived on this list, having launched in 1999.
The ETF has 103 holdings, including Apple (NASDAQ:AAPL) at a weight of 10.71 percent, Microsoft (NASDAQ:MSFT) at a weight of 9.7 percent and Amazon (NASDAQ:AMZN) at a weight of 8.16 percent.
2. Vanguard Information Technology ETF (ARCA:VGT)
Assets under management: US$44.08 billion
Founded on January 26, 2004, the Vanguard Information Technology ETF has a diverse portfolio, with a focus on small- and micro-cap stocks, as well as large-cap companies.
This tech ETF has 332 holdings, with Apple weighing in on top at 20.17 percent. Microsoft takes up 16.34 percent of the fund, followed by NVIDIA (NASDAQ:NVDA) at 3.35 percent.
3. Technology Select Sector SPDR Fund (ARCA:XLK)
Assets under management: US$39.81 billion
The Technology Select Sector SPDR Fund holds 76 technology companies and is the most seasoned tech ETF on the list, having begun trading on December 16, 1998. Like many of the ETFs on this list, it typically avoids smaller- and mid-cap companies and instead focuses on the big names in the technology sector.
Its top holdings are: Apple at 21 percent, Microsoft at 20.24 percent and NVIDIA at 4.62 percent.
4. ARK Innovation ETF (ARCA:ARKK)
Assets under management: US$21.11 billion
The ARK Innovation ETF was begun on October 31, 2014, and currently has 54 holdings. According to ETFdb.com, “The stated goal of ARKK is to invest in companies that are poised to profit from ‘disruptive innovation’ like artificial intelligence, DNA technologies, energy innovation, automation, financial technology and the increased use in cloud computing.”
The fund’s top holdings differ very much from its peers. Tesla (NASDAQ:TSLA) weighs in at 9.84 percent, followed by Teladoc Health (NYSE:TDOC) at 6.14 percent and Roku (NASDAQ:ROKU) at 5.56 percent.
5. First Trust Dow Jones Internet Index Fund (ARCA:FDN)
Assets under management: US$9.97 billion
The First Trust Dow Jones Internet Index Fund was started on June 23, 2006, and currently has 43 holdings with exposure to internet-focused companies. This fund targets tech companies, but also gives some weighting to consumer discretionary firms.
In terms of market cap, large-cap companies comprise the majority of this fund. The top holdings of this fund are: Facebook (NASDAQ:FB) at 8.68 percent, Alphabet (NASDAQ:GOOGL) at 5.34 percent and PayPal (NASDAQ:PYPL) at 5.33 percent.
This is an updated version of an article first published by the Investing News Network in 2018.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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