With a few exceptions, such as old-guard companies like International Business Machines (NYSE: IBM) and Cisco Systems (NasdaqGM: CSCO), 2013 has been good to investors in the technology sector.
Although the Nasdaq Comoposite and the Nasdaq 100, which is tracked by the PowerShares QQQ (NasdaqGS: QQQ), are still far removed from the highs seen prior to the busting of the technology bubble earlier this century, the Nasdaq has performed well this year as highlighted by QQQ’s almost 27% year-to-date gain. [Nasdaq Evolution Could Encourage New Highs]
Some familiar, large-cap tech names have posted jaw-dropping gains in market value this year, benefiting an array of ETFs in the process. In fact, several of this year’s 10 best tech stocks are among the top holdings in scores of tech and Internet ETFs and since some of those names have ascended to triple- and quadruple-digit prices, ETFs are the best way for some investors to access these stocks.
Take the example of Google (NasdaqGM: GOOG). The company’s 2013 market cap gain of almost $131 billion “exceeded Facebook’s entire market value, two HPs or about five Twitters,” writes Aaron Pressman for Yahoo Finance.
Speaking of Facebook (NasdaqGM: FB), which will join the S&P 500 later this month, that stock ranks third in terms of tech sector market cap gains with $75.4 billion. [S&P 500 ETFs Open up to Facebook]
Throw in the almost $64 billion in added market value for Amazon (NasdaqGM: AMZN) and it is easy to see why the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) and the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) are up an average about 50% this year. [Triple-Digit Divas Reside in These ETFs]
PNQI has hauled in over $150 million of its $246.1 million in assets under management this year. Amazon, Google and Facebook represent a quarter of PNQI’s weight. The ETF has also been boosted by Priceline (NasdaqGM: PCLN) and Yahoo (NasdaqGM: YHOO), which rank sixth and tenth on top-10 tech stocks of 2013 with a combined $47.5 billion in added market value. Priceline and Yahoo combine for 13.6% of PNQI’s weight.
In order, Google, Amazon, Facebook, Priceline and Yahoo are FDN’s top-five holdings and combine for 38% of the ETF’s weight.
Although some “old school” tech times, such as the aforementioned IBM and Cisco, have been disappointments this year, that is not true of all old line tech firms. With $93.4 billion in added market value, Dow component Microsoft (NasdaqGM: MSFT) has added more in market value this year than Facebook and Yahoo combined. “The appointment of a new CEO next year will be a major factor in which way the share price trends next,” writes Pressman.
Formerly embattled Hewlett-Packard (NYSE: HPQ) and semiconductor giant Intel (NasdaqG: INTC) have added $45.2 billion in market value this year. That has helped the Technology Select Sector SPDR (NYSEArca: XLK) and related ETFs endure slack performances by IBM, Cisco and Oracle (NYSE: ORCL). Google, Microsoft, Qualcomm (NasdaqGM: QCOM) and Intel combine for a quarter of XLK’s weight. [A Long-Term Perspective on Sector Investing]
Speaking of Qualcomm, the company’s market cap is slightly larger than Intel’s, making the former the largest semiconductor firm. Qualcomm is eighth on Yahoo’s tech top-10 list, followed by another chip firm, Micron Technology (NasdaqGM: MU). In just the past month, shares of Micron are up 23.2%. Those stocks combine for 22% of the iShares PHLX Semiconductor ETF (NasdaqGS: SOXX). [‘Tis the Season for Semis]
Tom Lydon’s clients own shares of Amazon, Google, Intel, Microsoft, Facebook and QQQ.