Indeed, some familiar faces boosted the technology sector in 2013, but that group does not include some of the sector’s behemoth’s such as Dow component International Business Machines (NYSE: IBM) and Apple (NasdaqGM: AAPL), the largest U.S. company by market value.
Despite a recent rally, IBM appears poised to rank among this year’s worst performers in the Dow. Although Apple has been on fire in the second half of 2013, its first half performance was forgettable and although the stock will likely finish higher for the year, it will also lag the S&P 500 and Nasdaq Composite.
Rather, tech sector upside in 2013 was dominated in large part by the return of glory days for Internet stocks. With that, the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) has been able to gain over 63% and now sits atop the tech ETF lineup with just two trading days left in 2013.
Not only is PNQI this year’s top tech ETF, but it ranks seventh among all non-leveraged ETFs in terms of year-to-date performance. A move to the top-five for PNQI is not out of the question assuming biotech stocks pullback over the next two days. [Battle for Top Honors Among Health Care ETFs]
PNQI also represents another 2013 feather in the cap of PowerShares. The fourth-largest U.S. ETF sponsor has the most ETFs in the top-10 sector or industry funds. PNQI joins the PowerShares Dynamic Media Portfolio (NYSEArca: PBS), PowerShares S&P SmallCap Consumer Staples Portfolio (NasdaqGS: PSCC) and the PowerShares S&P SmallCap Materials Portfolio (NasdaqGS: PSCM) as the PowerShares funds found among the 10 best sector ETFs. [Meet 2013’s Best Materials ETF]
Although PNQI has yet to make room for Twitter (NYSE: TWTR) and still does not feature LinkedIn (NYSE: LNKD) among its 80 holdings, Facebook (NasdaqGM: FB), Google (NasdaqGM: GOOG) and Yahoo (NasdaqGM: YHOO) combine for 21% of the ETF’s weight.
PNQI also features some international flair with a combined 7.7% weight to Baidu (NasdaqGM: BIDU) and Yandex (NasdaqGM: YNDX), the Googles of China and Russia. The ETF is also representative of the changing face of the Nasdaq as consumer discretionary names account for 30% of the ETF’s weight. That includes eBay (NasdaqGM: EBAY), Amazon (NasdaqGM: AMZN) and Priceline (NasdaqGM: PCLN) combining for over 23% of the fund’s weight. [Nasdaq Evolution Could Mean New Highs]
In confirmation of just how much investors have embraced Internet stocks in 2013, PNQI now has $278.7 million in assets under management, $174.5 million of which has come into the fund since the start of 2013. That puts PNQI in the top-15 of all PowerShares ETFs for year-to-date inflows, according to issuer data.
Not surprisingly, perhaps the most obvious risk facing PNQI heading into 2014 is its components’ valuations. The ETF sports a P/E of 36, nearly double that of the PowerShares QQQ (NasdaqGS: QQQ), the Nasdaq 100 tracking ETF.
PowerShares NASDAQ Internet Portfolio
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Apple, Amazon, Google, Facebook and QQQ.