Most people don’t have time to research and understand which small-cap tech company they should buy, so an exchange traded fund (ETF) offers an alternative. Donald H. Gold of Investor’s Business Daily points out that ETFs are passive investments tied to an index. Because they follow an index, ETFs won’t include some of the newer small and mid-cap growth names. Gold reviews the technology ETFs and finds that many of them hold the tech bellwethers that may be past their prime, that’s ok as long as you know what you are buying and it fits with your portfolio and financial goals.
iShares Goldman Sachs Technology (IGM) holdings are concentrated in Microsoft (MSFT), Cisco Systems (CSCO), IBM (IBM), Intel (INTC) and Hewlett-Packard (HPQ). These holdings make up 31% of the ETF. The same top five holdings are in the iShares Dow Jones U.S. Technology (IYW) at 39% of the ETF’s assets.
First Trust Dow Jones Internet Index (FDN) holds some different companies, again they are the more established and well known companies and make up 46% of the ETF. Holdings include Google (GOOG), eBay (EBAY), Yahoo (YHOO), Amazon (AMZN) and E-Trade (ETFC).
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.