Top Tech ETFs Of The Year

May 25, 2017

Technology investors are partying like it's 1999. That was the infamous final year of the dot-com bubble, when the tech-heavy Nasdaq rose a whopping 86%, an impressive end to one of the greatest bull markets in history.

Today's rally may not be as heady as it was back then―nor share prices as inflated―but for the first time in nearly two decades, tech is back to hitting new highs on a consistent basis. As measured by the Technology Select Sector SPDR Fund (XLK), tech is the top-performing sector of the year, with a return of 15.8%, more than double the gain of the broader S&P 500.

Tech heavyweights like Apple, Google, Microsoft and Facebook are hitting new records seemingly every day. Their combined weighting in the S&P 500 is now 11%, while tech as a whole accounts for 23% of the index.

It's not just the giants. Tech companies big and small are performing well this year, as evidenced by the 15.9% return for the Guggenheim S&P 500 Equal Weight Technology ETF (RYT), a fund that gives the same weighting to Apple as it does to every other tech stock in its portfolio.

Indeed, to see the best returns among tech-focused exchange-traded funds, investors must venture outside of broad tech ETFs into more niche areas, and in a few cases, outside the U.S. altogether. Here are the top tech ETFs of the year so far.

China Internet ETFs

At the top of the tech heap are internet ETFs focused on China. The Emerging Markets Internet & Ecommerce ETF (EMQQ) holds internet-related companies across emerging and frontier markets, but China accounts for about two-thirds of the portfolio.

Top holdings such as Tencent, Alibaba and Naspers have been on fire this year, buoying EMQQ to a year-to-date gain of 43.4%.

The KraneShares CSI China Internet ETF (KWEB) and the broader Guggenheim China Technology ETF (CQQQ) are in the same boat, with returns of 41.4% and 29.9%, respectively, in the period.

Though not focused on China, another international tech fund to see sizzling returns this year is the SPDR S&P International Technology Sector ETF (IPK), with its 23.4% gain. IPK holds a market-cap-weighted basket of tech stocks in developed markets outside of the U.S. Because it targets developed markets, it excludes China, giving it much different exposure than the aforementioned ETFs.

Currently, its three largest holdings are Samsung, SAP and ASML Holding.

 

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