Equity: Global Technology
There are now 11 ETFs in the Global Technology segment, but only one that truly captures the space—by design. IXN is the only ETF that aims to deliver the broad global technology
“IXN is the only ETF that aims to deliver the global technology industry” industry. TDIV only holds US-listed stocks that have paid dividends over the past 12 months, and the remaining funds each try to capture specific themes: SKYY targets cloud computing firms, SOCL targets social networking, ROBO tracks robotics firms, HACK tracks cybersecurity firms, ARKQ is a play on automation, and XT attempts to play multiple themes.
None of the theme funds comes close to capturing the full technology market, but none tries to. If you’re looking for global technology, IXN is the easy and obvious choice. If, instead, you’re intrigued by the promise of high yielding tech companies or theme plays, one of the other ETFs may be for you, but note the difficulty each fund faces in delivering pure-play exposure. SKYY weights its holdings equally in tiers, and TDIV and SOCL cap the weights of the biggest companies. All the theme funds tilt small, but they’re the only ETFs that offer those unique exposures.
The real deciding factor in this segment is each fund’s exposure, but cost-conscious investors may also worry about expense ratios and liquidity. IXN and TDIV are among the cheapest in the segment, while the other ETFs may charge up to twice as much. IXN is also one of the most liquid—though it doesn't trade nearly as much as relative newcomer HACK—but the other funds can be accessed fairly with some effort. (Insight updated 01/16/17)
All Funds (14)
IXN $1.1 B 1101759950 Comprehensive exposure
TDIV $628.76 M 628758966 Dividend-focused
SKYY $666.66 M 666662971.492 Cloud computing
SOCL $72.75 M 72754927.072073 Social media
HACK $790.59 M 790590000 Cybersecurity
ARKQ $18.32 M 18324000 Active; broad mandate
XT $850.41 M 850414350 Lowest fee
IPAY $56.76 M 56760000 New; trade with care.
BIGD $2.38 M 2384000 new; trade with care
PRNT $14.66 M 14664022.56 N/A
FINQ $2.41 M 2409000 N/A
CIBR $141.99 M 141988040.568 N/A
FINX $1.52 M 1520584.143633 N/A
BDAT $1.03 M 1026920 new; trade with care
ETF.com Grade as 01/12/17
Equity: Global Technology
ETF.com Efficiency Insight
The only broad global the sector fund is also the most Efficient. iShares' IXN tops the chart, and also boasts one of the lowest expense ratios in the segment. Solid tracking and a
“iShares' IXN tops the chart” successful securities lending program have made it even cheaper to hold than its headline fee would suggest. With a large, stable asset base, IXN is here to stay
The other funds in the segment vary in how well they deliver their thematic exposure. Dividend-seeking TDIV, cloud-themed SKYY, and social media-themed SOCL all follow their indexes well, and charge reasonable fees. All three are established funds with large AUMs. If their specialized portfolios appeal to you, you aren't likely to have any structural problems holding these funds.
Near the bottom of the score rankings are ROBO (which holds robotics companies) and ARKQ (an active ETF that holds firms in cutting-edge industries like AI, 3D printing and nanotech). Both funds charge segment-high fees. ROBO has struggled to track its index consistently, while ARKQ is simply unpopular and faces high closure risk.
HACK, one of the most successful ETF launches of 2014, sports a middling Efficiency score due largely to its high fee.
Like the companies they track, there's been a lot of recent innovation in the global tech fund space. Many of the funds here are simply too new to score, or have rapidly changing Efficiency metrics. Be careful with your investment decisions in this space, and review them frequently. (Insight updated 01/16/17)
ETF.com Tradability Insight
Most established funds in the global tech segment can be traded with relative ease. The only broad-market fund, IXN, trades reasonably well, though it isn't the most liquid. That honor
“Despite strong retail liquidity, HACK loses a point in block scoring” goes to HACK, a much younger fund that holds cyber security firms and trades millions of dollars daily at tight spreads. TDIV, SKYY and SOCL also trade well.
Robotics-themed ROBO isn't totally illiquid, but it doesn't see a lot of volume. Quoted spreads look manageable, but large orders may be difficult to execute. ARKQ sees minimal daily volume commensurate with its tiny asset base—there simply aren't enough shares to support a liquid market.
ARKQ and ROBO also struggle with liquidity at the block level. Both funds have relatively illiquid baskets, and ROBO charges a somewhat pricey creation fee. Despite its strong retail liquidity, HACK also loses a point in block scoring as its basket is also somewhat illiquid, inhibiting creations and redemptions. Still, block-sized trades might be executed in the secondary market.
As always, we recommend carefully placed limit orders set close to iNAV. Be careful of stale pricing when trading SOCL and ROBO, as many of the underlying stocks in these two funds don't trade when US markets are open. (Insight updated 01/16/17)
ETF.com Fit Insight
IXN is the only fund in the segment that tries to capture the global technology market, so it's no surprise that it's the only one that comes close. The next nearest ETF, TDIV,
“IXN is the only fund... that tries to capture the global technology market” only holds US-listed stocks that have paid dividends over the past year.
The remaining funds each try to capture a unique niche. As such, none of them Fit our benchmark well—if they did, they wouldn't be executing their respective mandates. While these funds aim for different niches, they share a difficult challenge: capturing true pure-play exposure to their respective themes. Our analysis does not confirm or deny success in meeting this objective, but it is quite clear that they don't match the broad market.
Like our benchmark, IXN and TDIV allocate most of their portfolios to the US. IXN allocates over 10% to Apple alone, and nearly all its top holdings are US-based. Most of the thematic funds are also mostly invested in the US. ROBO and SOCL—holdings robotics and social media firms, respectively—have heavy exposure to Japan and China. ROBO also loads up on Germany.
IXN is by far the most marketlike by industry, with a plurality of its portfolio allocated to software, and large portions allocated to computers, office machines and semiconductors. The other ETFs make massive industry bets in an attempt to deliver their respective niche exposures. TDIV overweights semiconductors and includes a 20% allocation to telecoms. HACK, SKYY and SOCL heavily overweight software and exclude semiconductors. ROBO allocates just over half its portfolio to machinery and equipment, an industry that's completely absent in our benchmark.
IXN, the only purely market-cap-weighted ETF in the segment, tilts much larger than the other ETFs. TDIV, SKYY, and SOCL weight constituents in tiers, which de-emphasizes large companies. In addition, many of the largest technology companies fall outside the theme ETFs' universes and are thus excluded. (Insight updated 01/16/17)