This year, the S&P 500 is down to 11.9%. Simultaneously, technology stocks continue to be one of the very popular segments of the market. This is a continuation of a trend that produced the S&P Dow Jones Guides to move 23 famous innovative heavy-duty shares to a new communications facilities sector in September 2018. Tech-focused ETFs (Exchange-Traded Funds) have been riding the highs of this strong sector. The best tech ETFs have done better than the S&P this year. Let's take a look at two of the tech ETFs that have done the best so far this year, as well as a new one that may do well because of the change in the communications facilities sector. So let us take a look at the best tech ETFs so far this year.
Technology Select Sector SPDR Fund (XLK)
One of the biggest ETFs that focus on technology is the Select Sector SPDR Fund for Technology. The average daily trading volume for XLK is $27 million, and the expense ratio is 0.14 percent. It is in charge of $26 billion worth of net assets. This ETF gives investors a lot of different ways to invest in the U.S. technology market. ETF.com says it is less volatile because it doesn't usually include small-cap or many mid-cap companies. XLK is a good buy for tech-focused ETF investors because it is big, cheap, and easy to buy and sell. It has a net asset value of $86.9 and a YTD return of -4.60 percent.
VGT (Vanguard Information Technology)
The Vanguard Information Technology ETF is "one of the most diverse market-cap-weighted technology ETFs," according to ETF.com. VGT's $25.21 billion in AUM consists of small and micro-cap stocks, which is different from XLK. Still, a lot of people buy and sell it. With a net expense ratio of 0.10 percent, it also keeps investors' total costs down. The big tech companies Meta (formally known as Facebook), Netflix, Google, and Amazon, known by the acronym FANG, were all moved to S&P's new communications services sector.
iShares Evolved U.S.
If you want a technology ETF that looks a bit more like how things used to be, the iShares Evolved U.S. Technology ETF is a good choice. Here is a part of our look at the iShares Evolved health-care ETF that will help you understand the "Evolved" series. Instead of a human manager, almost all of these funds will be run by robots. Using language processing and machine learning, the goal is for these robots to figure out what goes where. As things are now, systems like the GICS (Global Industry Classification Standard) divide companies into sectors and industries.
Communications Services Select Sector SPDR Fund (XLC)
One of the newest ETFs that invest in this area is the Communications Services Select Sector SPDR Fund. It was made in June 2018 because the way tech stocks are grouped by sector would change soon. XLC is made up of companies from the old telecom sector as well as companies from the media and entertainment industries. This means that the stocks in XLC's basket include some of the best-known "tech" names as well as stocks in related industries. It's been just over two years since XLC started. It is the best deal in our group, with a NAV of $48 and a return of -11.06 percent so far this year.
Invesco S&P SmallCap Information Technology Portfolio
If you don't mind taking on more risk in a broad index portfolio, you might want to look into the Invesco S&P SmallCap Information Technology Portfolio (PSCT, $90.87). PSCT has 75 holdings in different tech industries, such as semiconductors and equipment for semiconductors (27.9%), electronic equipment, instruments, and parts (26.9%), software (18.9%), and IT services (16.9%), among others. Also, the top holdings are very different. They include BRKS (Brooks Automation), which makes automation, vacuum, and other tools for companies that make semiconductors; LPSN (LivePerson), which makes AI chatbots; and ALRM, which makes home security systems (Alarm.com).
Direxion Work From Home Exchange Traded Fund
"Work remotely" is now one of the most common phrases of 2022, as large numbers of Americans were made to leave their workplaces for the solace, but also diversions, of home. But it's not a brand-new idea. Many Americans may have only heard of remote work in the past few months, but this more flexible way to work is now on the emergence for years. Direxion says that even in 2017, "at least some period" was spent "working from home" by 43% of Americans who had jobs. When it came out in June, the Direxion Work from Home ETF was the first one-stop shop to take advantage of this trend.
Conclusion
Even though technology ETFs have been relatively stable thus far this year, investors shouldn't let themselves become too comfortable in the market. Because of the possibility that the performance of these ETFs (Exchange-Traded Funds) might change at any time, it is essential to monitor them carefully.
