ETF Trends
ETF Trends

Technology stocks have been relative strength leaders both year to date and in the trailing one year period, but in terms of a trailing five year period the sector still actually has some ground to make up in catching say the S&P 500 Index.

We find ourselves following fund flows activity and when applicable, ETF options activity in the space as we approach the upcoming corporate earnings season. The largest ETF in the category is the well-known XLK (SPDR Technology Select Sector, Expense Ratio 0.16%) which has approximately $12.4 billion in assets under management currently, and the fund has seen some light redemption activity lately in the marketplace to the tune of about $200 million.

XLK is of course market cap weighted and benefitting greatly from AAPL’s surge as it grows closer to eclipsing its all-time high. AAPL is expected to release quarterly earnings on 7/23 after the market close, so its >15% weighting in XLK is of course something for investors to consider for the good or the bad in coming weeks.

Other top names in XLK are MSFT (8.40%), VZ (5.65%), T (5.01%), and IBM (4.90%), with the two Google stocks GOOGL (4.38%), and GOOG (4.30%) filling the number five and six slots in the underlying holdings.

The second and third largest “Technology Equity” funds in the marketplace are VGT (Vanguard Information Technology, Expense Ratio 0.14%) and IYW (iShares DJ U.S. Technology Sector, Expense Ratio 0.46%) which have $5.4 billion and $3.9 billion in AUM respectively.

VGT has raised >$650 million and IYW has pulled in >$250 million year to date. There are two other funds that have eclipsed the $1 billion mark in this space as well, FDN (First Trust DJ Internet, Expense Ratio 0.57%), and IGV (iShares S&P GSTI Software, Expense Ratio 0.47%).

FDN we find interesting in that its highest weighted holding at the moment is none other than FB (6.93%), slightly edging out AMZN, with both of these stocks expected to release quarterly earnings in the near term (7/23) and (7/24) respectively.

There is a bit of a sharp drop-off in terms of overall asset levels after the aforementioned funds, and we also like to monitor flows and volume in two daily levered ETFs tied to the S&P Technology sector index, those being TECL (Direxion Daily Technology Bull 3X, Expense Ratio 0.95%) and TECS (Direxion Daily Technology Bear 3X, Expense Ratio 0.95%.

Technology Select Sector SPDR

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.