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Technology ETFs To Consider As Nasdaq Index Breaks To All-Time Highs

Among the major stock indexes, the tech-heavy Nasdaq is in focus after pushing this week to all-time highs. It’s little surprise then that technology ETFs are setting records too.

Technology Select Sector SPDR ( XLK ) made a 52-week high of 47.97 Thursday and was modestly lower on the stock market today . This $13.1 million ETF is the largest in its category and offers broad exposure to the sector. Its holdings span the computer, software, IT services, semiconductor and communication industries.

Thirty-two other tech ETFs also set fresh highs Thursday, out of roughly 48 exchange traded funds offering either broad exposure to technology equities or to specific industry segments within the tech sector.

XLK is up 13.5% year to date through Sept. 22. That’s better than the broad market’s 8.2% gain but worse than some peers in the tech sector.

For ETF investors , the biggest rewards within technology so far in 2016 have come from the semiconductor space.

PowerShares Dynamic Semiconductors ( PSI ) is the year’s best-performing tech ETF, up 28.5% through Sept. 22.

Larger peer VanEck Vectors Semiconductor ( SMH ), up 27.2%, gathered more assets though. Investors poured $40.4 million into SMH in the first eight months of 2016.

This chip ETF holds a portfolio of 25 chip makers, including Taiwan Semiconductor ( TSM ), Broadcom ( AVGO ), Nvidia (NVDA) and Analog Devices (ADI).

One of its two largest holdings, industry giant Intel (INTC), last week hit its best level in a year after the company raised its Q3 sales outlook, citing improvement in the personal computer market.

IBD’S TAKE: VanEck Vectors Semiconductor ETF taps into many innovative chip companies and is benefiting from new areas of growth within this tech sub-industry .

Another top-performing tech ETF this year is Global X Social Media (SOCL), up 25.2% so far in 2016. On Friday, a rumored Twitter ( TWTR ) deal saw the stock fly as much as 20% higher.

Hand in hand with Twitter, SOCL made an all-time high, reaching 25.33. The ETF is up roughly 75% since launch five years ago.

[ibdchart symbol=”socl” type=”daily” size=”full” position=”leftchart” ]

The social media industry represents a more pure-play growth opportunity within technology, says Jay Jacobs, director of research for Global X. For ETF investors, that may mean more risk for potentially bigger rewards.

Jacobs sees the broad sector increasingly bogged down by lower growth segments such as printing and computer hardware, while the social media industry is enjoying tail winds from internet penetration around the world.

In particular, there’s more interaction with brands on social media, rather than through traditional advertisements, spurred by greater adoption of mobile phones around the world and spending by digital-savvy millennials, according to Global X.

“Going forward, we believe these trends will continue to propel top-line revenue growth, which will continue to make social media companies attractive targets of software and internet companies looking to spur growth,” Jacobs told IBD in an email.

Google owner Alphabet (GOOGL) and Salesforce.com (CRM) are reported to be among companies interested in buying Twitter. The microblog firm has struggled to grow users,  but is seeing success with its live streaming of NFL Thursday Night Football games .

Investors yanked $14.4 million from SOCL in 2016 through August. Only a dozen technology ETFs out of 48 saw net inflow over the same period — a sign of the sector’s troubles over the first half of the year.

Flow of fresh investor money has recently started to turn around for SOCL, according to Global X.

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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.

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Technology ETFs To Consider As Nasdaq Index Breaks To All-Time Highs Reviewed by on . Among the major stock indexes, the tech-heavy Nasdaq is in focus after pushing this week to all-time highs. It's little surprise then that technology ETFs are s Among the major stock indexes, the tech-heavy Nasdaq is in focus after pushing this week to all-time highs. It's little surprise then that technology ETFs are s Rating:
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