The technology industry is a great place to find innovative stocks with the potential for huge gains, and many investors like to use index-tracking investments like exchange-traded funds to take advantage of opportunities in particular niches of the market. The most popular ETFs in the technology space are heavily weighted toward the behemoths of the industry, but for top returns, you have to drill down a bit deeper and find the most promising corners of technology. The funds below are among the top-performing index ETFs in technology in 2017, and they’ve all attracted at least $100 million in assets because of their success.
|Technology Fund||Assets Under Management||Expense Ratio||Year-to-Date Return|
|Guggenheim China Technology (NYSEMKT:CQQQ)||$155 million||0.70%||49%|
|Global X Social Media Index (NASDAQ:SOCL)||$155 million||0.65%||39%|
|PowerShares Nasdaq Internet (NASDAQ:PNQI)||$467 million||0.60%||32%|
|iShares North American Tech-Software (NYSEMKT:IGV)||$1.07 billion||0.48%||29%|
|iShares Global Tech (NYSEMKT:IXN)||$1.26 billion||0.48%||27%|
|Robo Global Robotics and Automation Index (NASDAQ:ROBO)||$1.01 billion||0.95%||26%|
What you should know about these tech funds
Each of the funds above focuses on a different area of the technology sector, but they’ve all found ways to profit. The Guggenheim China fund concentrates its portfolio on Chinese stocks, with all of the nation’s top e-commerce and internet companies represented among the portfolio’s top holdings. The idea of the fund is to benefit from China’s goal to become a digital nation both for enterprises and for ordinary citizens, and that theme has worked extremely well so far this year as investors rediscover the growth potential of the Chinese economy.
The Global X Social Media ETF has also benefited from the rise of Chinese tech companies, with about a third of its assets in emerging markets in the Asia-Pacific region. Yet this fund isn’t afraid to tread in busier areas, with the two top social media plays in the U.S. also among its top holdings. You’ll find a variety of approaches to social media, including microblogging and video-gaming companies, as well as more traditional social networking tools. Strong performance globally in this niche has sent shares of the ETF sharply higher in 2017.
The PowerShares Internet fund offers a more domestically focused equivalent of what the Guggenheim China fund does internationally, with broad-based exposure to companies that benefit from the internet. From social networks and video-streaming services to online travel and e-commerce websites, the PowerShares fund tracks Nasdaq-listed internet stocks, so about three-quarters of its holdings are U.S. companies, with most of the remainder giving it exposure to China.
Going beyond the internet
Internet stocks have been hot, but they aren’t the only investment vehicles to make money in technology. The iShares North American Tech-Software ETF focuses on software development companies, and among its top holdings, you’ll find some of the colossuses of the tech world. The top producers of database, publishing, office, customer relationship management, and video game software are all among the fund’s top holdings, and solid performance from these stocks in general has helped lift the fund higher.
The iShares Global Tech fund goes even further, giving investors the who’s who of technology companies around the world. U.S. companies dominate the list, making up all of the top five holdings and representing more than 75% of the fund’s assets. Stocks from Japan, Korea, China, and various parts of Europe round out the portfolio, offering a well-diversified but megacap-heavy set of holdings to its investors.
Finally, the Robo Global ETF focuses on companies in the robotics and automation fields from various corners of the world. The fund has a decidedly smaller-company focus, with a third of its assets invested in small-cap stocks and another 42% in mid caps. You’ll find producers of unmanned aerial vehicles, robotic surgical equipment, and autonomous vacuum cleaners among its holdings, along with makers of enabling technology to help further robotics and automation enterprises.
Profit from tech
The technology sector is a fertile ground for high-growth companies, and there are many ways to position yourself to produce long-term gains. The six funds above have been among the most successful this year, but dozens of other tech ETFs have the potential to become the winners of tomorrow as well.