The technology sector has shown strong resilience amid the coronavirus pandemic. In fact, it has driven the bull market since the March lows and has been the best-performing sector so far this year with the S&P 500 Information Technology climbing more than 26%. In comparison, the S&P 500 and Nasdaq Composite Index has gained 4.4% and 24.9%, respectively.
The gains were primarily driven by mega-cap companies, especially the FAANG stocks though these have bled lately on elevated valuation concerns. Notably, after an astounding surge since the March lows, these stocks are now selling at very rich valuations. Still, they are fundamentally strong.
This is especially true as the COVID-19 pandemic has led to the global digital shift, which has accelerated e-commerce for everything ranging from remote working to entertainment and shopping. The resurgence in coronavirus cases lately and the prospect of lockdowns will continue to fuel demand for Internet (read: Stay-At-Home ETFs to Soar Further on New Lockdown Measures).
Further, the rapid adoption of cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning, digital communication and 5G technology will continue to drive the sector higher. As companies across sectors and many individuals are dependent on remote working, cloud-computing services have become essential.
Given this, we have highlighted those tech ETFs that are at the forefront of the broad market rally this year.
ARK Next Generation Internet ETF ARKW – Up 88.6%
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds 49 stocks in its basket with AUM of $2.4 billion. It trades in an average daily volume of 726,000 shares and charges 76 bps in annual fees from investors (read: Internet ETFs Are Hot Picks Amid the Coronavirus Crisis).
ARK Innovation ETF ARKK – Up 83.8%
It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 47 securities in its basket and charges 75 bps in annual fees. The product has gathered $8.9 billion in its asset base and trades in average daily volume of 2.2 million shares.
MicroSectors FANG+ ETN FNGS – Up 73.5%
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in equal weights of 10% each in its basket and charges 58 bps in annual fees. The product has accumulated $56 million in its asset base and trades in average daily volume of 26,000 shares. It has a Zacks ETF Rank #3 (Hold) (read: 5 Best ETFs of Q3 With Room for Further Upside).
O’Shares Global Internet Giants ETF OGIG – Up 68.9%
The fund invests in some of the largest global companies that derive most of their revenues from the Internet and e-commerce sectors that exhibit quality and growth potential by tracking the O’Shares Global Internet Giants Index. It holds a basket of 71 stocks and charges 48 bps in annual fees. OGIG has been able to attract $406 million in its asset base and trades in average daily volume of 213,000 shares.
WisdomTree Cloud Computing Fund WCLD – Up 67.2%
This ETF offers exposure to emerging and fast-growing U.S.-listed companies (including ADRs) that are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 53 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $798.3 million in its asset base and trades in average daily volume of 756,000 shares. It has a Zacks ETF Rank #1 (Strong Buy).
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ARK Next Generation Internet ETF (ARKW): ETF Research Reports
ARK Innovation ETF (ARKK): ETF Research Reports
OShares Global Internet Giants ETF (OGIG): ETF Research Reports
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
MICRSFANG (FNGS): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.