Best Performing Tech ETFs

May 06, 2019

The new, revamped technology sector hasn’t lost a beat. The pared-down sector, which lost some of its key constituents following changes to the Global Industry Classification Standard (GICS) last September, has been handily outperforming the broader stock market and every other sector so far in 2019.

The Technology Select Sector SPDR Fund (XLK), which tracks the tech sector within the S&P 500, is up 26.4% this year, topping the 17% gain for the broad stock market index.

The loss of heavyweights like Alphabet and Facebook to the new communication services sector didn’t dampen returns one bit.

 

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

 

In fact, XLK is beating its fellow Communication Services Select Sector SPDR Fund (XLC) by six percentage points in returns this year.

Broad Tech ETFs Tough To Beat

XLK is one of 72 technology ETFs traded on U.S. exchanges. It, along with the even broader Vanguard Information Technology ETF (VGT), are the largest ETFs in the space, both with about $20.8 billion in assets under management.

For liquid, diversified exposure to the tech sector, those funds are hard to beat. Similarly, their performance so far this year, up 26.4% and 27.2%, respectively, has also been tough to beat.

Not many tech ETFs can claim substantially higher returns. Five leveraged ETPs, including the Direxion Daily Semiconductor Bull 3X Shares (SOXL), up 127.9%, and the Direxion Daily Technology Bull 3X Shares (TECL), up 90.9%, have done better.

But take leverage out of the equation and the returns are much more in line with XLK and VGT.

 

Top-Performing Technology ETFs (excluding leveraged/inverse)

Ticker Fund YTD Return (%)
SOXX  iShares PHLX Semiconductor ETF 35.41
FTXL  First Trust Nasdaq Semiconductor ETF 34.93
XSD  SPDR S&P Semiconductor ETF 34.52
PTF  Invesco DWA Technology Momentum ETF 33.89
CHIK  Global X MSCI China Information Technology ETF 33.47
SMH  VanEck Vectors Semiconductor ETF 33.42
OGIG  O'Shares Global Internet Giants ETF 31.80
PSI  Invesco Dynamic Semiconductors ETF 30.92
XITK  SPDR FactSet Innovative Technology ETF 30.76
QTEC  First Trust NASDAQ-100 Technology Sector Index Fund 30.45
XSW  SPDR S&P Software & Services ETF 30.35
KWEB  KraneShares CSI China Internet ETF 29.92
TTTN  TigerShares China-U.S. Internet Titans ETF 29.80
AIQ  Global X Future Analytics Tech ETF 29.78
PSJ  Invesco Dynamic Software ETF 29.58

Data measures total returns for the YTD period through 5/2/2019

Chipmakers Bounce Back

Excluding inverse/leveraged products, the top tech fund of the year is the iShares PHLX Semiconductor ETF (SOXX), with a gain of 35.4%.

Shares of chipmakers like Qualcomm and Nvidia moved sharply higher in 2019, recovering from a dismal fourth quarter, as fears about the global economy abated. In addition to SOXX, the First Trust Nasdaq Semiconductor ETF (FTXL), the SPDR S&P Semiconductor ETF (XSD) and the VanEck Vectors Semiconductor ETF (SMH) have also outperformed this year.

Going further down the list are a handful of China tech ETFs, with returns of as much as 33.4%. Separate from the U.S. tech sector, Chinese tech stocks have nonetheless been a hot place to be. The Global X MSCI China Information Technology ETF (CHIK) exposes investors to these stocks—including Lenovo, Sunny Optical and Xiaomi—which were hammered last year due to trade war concerns, but have since bounced back.

Software ETFs On A Roll

Along with semiconductors, another area of tech that’s been rolling this year is software. From MongoDB to Twilio to Adobe, software stocks—especially those tied to the cloud—have been on a tear.

That’s in large part why the SPDR S&P Software & Services ETF (XSW) and the Invesco Dynamic Software ETF (PSJ) are among the top-performing tech ETFs of the year.

Software stocks also make up a big chunk of the Invesco DWA Technology Momentum ETF (PTF), which selects tech stocks to hold based on price momentum.

Atypical Tech ETF

Another fund worth mentioning in the O’Shares Global Internet Giants ETF (OGIG). The fund, which is less than a year old, outperformed this year thanks to heavy positions in FAANG stocks like Facebook, Amazon, Alphabet and Netflix.

 

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

 

None of those companies are in the technology sector as defined by GICS, but many investors still consider them tech stocks. OGIG is up 31.8% so far this year.

 

Top-Performing Technology ETFs (leveraged)

Ticker Fund YTD Return (%)
SOXL  Direxion Daily Semiconductor Bull 3X Shares 127.89
TECL Direxion Daily Technology Bull 3X Shares 90.95
CWEB Direxion Daily CSI China Internet Index Bull 2X Shares 62.55
USD  ProShares Ultra Semiconductors 61.82
ROM  ProShares Ultra Technology 56.44

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

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