When it comes to technology exchange traded funds (ETFs), is it better to target a specific segment of the sector or broaden your horizons?
Gary Gordon for ETF Expert believes that two-year returns indicate that the results are better with the broader funds. To make his point, he says that the iShares Dow Jones Technology Fund (IYW) was out-hustled by only one of the sub-sector ETFs, which was the iShares Goldman Sachs Software Fund (IGV).
The three-year annualized returns for IYW are 7.8%; for IGV, they’re 8.6%. The three-year numbers for the Technology Select Sector SPDR (XLK) are up 7.7%.
The other funds saw greater volatility:
- First Trust Dow Jones Internet (FDN), down 5.5% in the last year*
- Goldman Sachs Networking (IGN), three-year annualized returns up 4%
- State Street Semiconductors (XSD), down 10.7% in the last year*
- PowerShares Lux Nanotech (PXN), down 18.2% in the last year*
Easy and instant diversification is one of the most attractive features of ETFs. If you decide you’d rather tackle a sub-sector, just have your stop loss in place and be prepared to hit the eject button if and when the time comes to do so.
*Three-year annualized returns not available
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.