Top Tech ETFs Of 2016

August 05, 2016

Semiconductors Leading The Pack

Aside from the three aforementioned broad tech ETFs, the other seven top performers are more niche funds focused on a subset of the space.

For example, four of the top six tech ETFs this year are products focused on the semiconductor industry. At the top of that heap is the VanEck Vectors Semiconductors ETF (SMH | A-71), which is the best-performing nonleveraged/noninverse tech ETF of 2016 so far, with a gain of 18.2%.

SMH tracks a market-cap-weighted index of the 25 largest U.S.-listed semiconductor stocks. Its portfolio is dominated by chipmakers such as Intel, Taiwan Semiconductor and Qualcomm. Altogether, the top five holdings make up more than 43% of the fund.

Meanwhile, the PowerShares Dynamic Semiconductors Portfolio (PSI | B-74), the iShares PHLX Semiconductor ETF (SOXX | A-87), and the SPDR S&P Semiconductor ETF (XSD | A-68) are a trio of semiconductor ETFs that have also performed well this year, with gains of 12% to 17%.

PSI uses a proprietary model to select and weight its holdings; SOXX tracks a market-cap-weighted basket of U.S.-listed firms, but caps individual weightings at 8%; and XSD uses an equal-weighted approach to get exposure to the industry.

YTD Returns For SMH, PSI, SOXX, XSD

 

High Yield In Tech

Tech has long been known as being filled with growth companies that offered little in the way of dividends, but that's changed in a big way in recent years. Many of the old-guard tech companies now have hefty dividend payments, which the First Trust Nasdaq Technology Dividend Index Fund (TDIV | A-67) attempts to capitalize on.

The fund is up 14.5% this year by holding tech and telecom firms weighted by the amount of dividends they've paid in the past 12 months. Top holdings include Microsoft, Intel and IBM.

The result is an ETF that yields just under 3%, more than a percentage point more than the broader sector.

Social Media & Software

The Global X Social Media Index ETF (SOCL | B-44) and the PowerShares Dynamic Software Portfolio (PSJ | B-35) are another pair of subsector ETFs that have performed well in 2016.

SOCL, up 11.5% year-to-date, is the only product on the market to target social media companies. Top holdings include LinkedIn, Facebook and China's Tencent. It holds a global portfolio, but caps the weight of any individual name in the fund at 10%.

Meanwhile, PSJ uses a quant-driven model to choose software-focused tech companies to hold. The ETF is up 10.8% in 2016 so far thanks to top holdings such as Activision Blizzard, Citrix Systems and Salesforce.

YTD Returns For TDIV, SOCL, PSJ

 

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