Best & Worst Performing Tech ETFs Of The Year
Every tech ETF is down this year, but returns vary widely.
The technology sector hasn’t been this out of favor since the dot-com crash of over two decades ago. The once beloved sector has been ground zero for the carnage in high growth stocks that’s been taking place since late last year.
You can see it somewhat in the broad sector ETFs. The Technology Select Sector SPDR Fund (XLK) is the third-worst-performing sector ETF in the SPDR suite, with a year-to-date loss of 23.9%.
But that fund, dominated by Apple and Microsoft, which together make up 44% of its portfolio, isn’t completely reflective of the brutality of this year’s sell-off in tech. Some other tech ETFs are down much, much more, and they are arguably more representative of the breadth and depth of the 2022 tech wreck.
On the other hand, there are some tech ETFs that have done better than XLK—though there aren’t any with outright gains for the year.
Indeed, every single noninverse technology ETF listed in the U.S. is in the red for the year, but returns vary quite significantly. In the paragraphs below, I highlight some of the best and worst performers of the bunch.
(Note: I took a somewhat expansive view of what constitutes a technology ETF, adding several funds that ETF.com classifies as “innovative” ETFs. This doesn’t adhere to strict industry classifications under GICS, but how could you have a list of best and worst tech ETFs without including any ARK funds?)
Blockchain ETF Tops Worst Performers List
Taking the mantle of worst-performing tech ETF of the year is the Global X Blockchain ETF (BKCH). Though bulls have high hopes that one day crypto can become uncorrelated from the stock market—and particularly tech stocks—so far, that hasn’t happened.
Bitcoin and ether have tracked the Nasdaq quite closely in 2022, with the two down 35% and 46%, respectively, on a year-to-date basis.
BKCH, which holds shares of companies involved with blockchain tech—not cryptoassets themselves—has done even worse than bitcoin and ether. It’s down nearly 67% so far this year, led by losses in companies like Coinbase, Riot Blockchain and Marathon Digital.
ARK ETFs In Shambles
Of the 10 worst-performing tech ETFs of the year, three are managed by none other than ARK: the ARK Fintech Innovation ETF (ARKF), the ARK Innovation ETF (ARKK) and the ARK Next Generation Internet ETF (ARKW).
ARK is arguably the poster child for the 2022 tech wreck, so it’s fitting that so many of its funds are among the worst performers. Cathie Wood’s ETFs hold many of the former pandemic-era darlings that have now become pariahs. Those include Roku, Zoom and Teladoc. Even ARK’s one big winner, Tesla, has faced a rocky last few weeks.
Cybersecurity ETFs Outperform
On the other side of the ledger, we have the tech outperformers. As I mentioned earlier, they’re still down, but with losses ranging from 14% to 22%, that’s really not that bad in this tape.
At the top of the heap is the SPDR S&P Kensho Future Security ETF (FITE), lower by 14% year-to-date. FITE is a thematic fund focused on companies “driving innovation behind future security, which includes the areas of cyber security, advanced border security, and the following areas for military application: robotics, drones and drone technologies, space technology, wearable technologies and virtual or augmented reality activities.”
More than one-third of the ETF’s portfolio is in the aerospace and defense industry, but one-quarter of it is in software companies, particularly cybersecurity firms.
There are a few other cybersecurity-focused ETFs in the top 10 ETF list, the iShares Cybersecurity and Tech ETF (IHAK) and the First Trust NASDAQ Cybersecurity ETF (CIBR). This is an area that’s garnered attention due to the plethora of cyberattacks over the past year and worries that the conflict with Russia raises the cyber threat level.
Dividend-Focused ETFs Hold Up
The final two ETFs I’ll point out (see the full list below) are the First Trust NASDAQ Technology Dividend Index Fund (TDIV) and the ProShares S&P Technology Dividend Aristocrats ETF (TDV), each down around 15%.
These funds hold shares of dividend-paying technology stocks. That results in portfolios of more mature technology companies, which aren’t focused so much on growth as they are profitability and cash flows; think of companies like Intel, Texas Instruments and Oracle.
(Use our stock finder tool to find an ETF’s allocation to a certain stock.)
Those companies never had the high-flying valuations and growth prospects of other companies in tech, and so they’ve been relatively insulated from the reckoning in the broader space.
Best-Performing Tech ETFs Of The Year (ex. leveraged/inverse)
Data measures total returns for the year-to-date period through May 24, 2022
Worst-Performing Tech ETFs Of The Year (ex. leveraged/inverse)
Data measures total returns for the year-to-date period through May 24, 2022
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