Technology has been the best-performing sector this year. This is especially true as the ultra-popular tech ETF XLK has gained 12.4% against loss of 2.6% for the broad market fund SPY. Most of the rally has been driven by the e-commerce boom and the shift in consumer habits to a purely digital world with work, entertainment and shopping from home during the COVID-19 pandemic (read: Ultra-Popular Tech ETFs You Should Not Ignore).
Lockdown measures to contain the virus has propelled demand for cloud computing, gaming, e-sports and streaming services resulting in soaring stock prices of companies in many corners of the sector. Additionally, investors have largely piled into software shares which are apparently more insulated from the impacts of the virus. As such, the sector’s resilience in one of the worst economic environments that the United States has ever seen has led to its outperformance. In fact, many of the FANG stocks and its likes have been hovering around their all-time highs with the combined market value of the big four companies – Facebook FB, Apple AAPL, Amazon AMZN and Microsoft MSFT – is now close to $5 trillion.
Further, technology has a solid Zacks Sector Rank, being in the top 44%, suggesting continued outperformance in the coming months. The long-term outlook for the sector remains strong given the rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning and 5G technology (see: all the Technology ETFs here).
Given this, investors might want to tap the space with the best-performing technology ETFs of the first half. Below, we have highlighted those that could be excellent picks to benefit from the current trends:
WisdomTree Cloud Computing Fund WCLD – Up 44.7%
This fund offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs) primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 52 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $261.9 million in its asset base and trades in average daily volume of 136,000 shares. It has a Zacks ETF Rank #2 (Buy) (read: ETFs With More Than 1000% Growth in AUM This Year).
ARK Next Generation Internet ETF ARKW – Up 42.3%
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 46 stocks in its basket with AUM of $1.1 billion. It trades in average daily volume of 281,000 shares and charges 76 bps in annual fees from investors.
O’Shares Global Internet Giants ETF OGIG – Up 39.8%
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 80 stocks and charges 48 bps in annual fees. OGIG has been able to attract $210.5 million in its asset base and trades in average daily volume of 111,000 shares.
Global X Video Games & Esports ETF HERO – Up 38.2%
This ETF offers exposure to companies that develop or publish video games, facilitate streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. This can be easily done by the Solactive Video Games & Esports Index. Holding 41 securities in its basket, the fund charges 50 bps in annual fees and trades in average daily volume of 71,000 shares. The ETF has managed asset worth $95.4 million (read: 6 Equity ETFs in Green Last Week Despite Wall Street Bloodbath).
MicroSectors FANG+ ETN FNGS – Up 32.6%
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 equal-weighted stocks in its basket and charges 58 bps in annual fees. The product has accumulated $43.4 million in its asset base and trades in average daily volume of 8,000 shares.
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