With most U.S. market segments down for the year, investors may want to hold on to technology and sector-related exchange traded funds as the tech space may still generate growth for the year.
“I think there is very good growth in tech,” Allianz Global Investors senior portfolio manager Walter Price told CNBC. “Technology companies] may moderate in our slower-growth economy, but I think tech has still got good growth, much better growth than most sectors in the economy.”
For broad technology exposure, investors can track sector-ETF plays. For instance, the Technology Select Sector SPDR (NYSEArca: XLK) follows technology companies taken from the S&P 500 index, iShares U.S. Technology ETF (NYSEArca: IYW) tracks the Dow Jones U.S. Technology Index and Vanguard Information Technology ETF (NYSEArca: VGT) reflects the performance of the broader MSCI US Investable Market Information Technology 25/50 Index. The three tech ETFs all include hefty tilts toward some of the largest tech names, such as Apple (NasdaqGS: AAPL), Microsoft (NasdaqGS: MSFT), Facebook (NasdaqGS: FB) and Alphabet (NasdaqGS: GOOG).
In the tech space, internet names have been among standouts over the past year, notably the so-called FANG – Facebook, Amazon (NasdaqGS: AMZN), Netflix (NasdaqGS: NFLX) and Google. Mark Mahaney, RBC Capital Markets’ lead Internet analyst, is also bullish on the FANG group for the year ahead. [Internet ETFs’ Big 2015]
ETF investors can also track this group through internet-focused ETFs, including the First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) and PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI).
FDN tries to reflect the performance of the Dow Jones Internet Composite, which includes a number of online search engines, social networking, e-commerce, internet infrastructure and telecom services companies. It includes 10.2% FB, 10.2% AMZN, 5.3% GOOGL, 5.2% GOOG and 5.2% NFLX.
PNQI follows the NASDAQ Internet Index, which like the name implies includes a number internet-related businesses as well. The ETF includes 8.6% GOOG, 8.4% FB, 8.3% AMZN and 4.2% NFLX.
Price also pointed to potential opportunities in new developments in cloud technology and video advertising on the internet. “Those trends aren’t going away,” Price said.
Investors can also dip into the cloud computing space with the First Trust ISE Cloud Computing Index Fund (NasdaqGM: SKYY). SKYY tracks the ISE Cloud Computing Index, which track the performance of companies actively involved in the cloud computing industry. To be included in the index, a security must be engaged in a business activity supporting or utilizing the cloud computing space, listed on an index-eligible global stock exchange and have a market capitalization of at least $100 million.
Max Chen contributed to this article.