With the benchmark Nasdaq Composite breaking at another record high on strong first quarter earnings expectations, more investors are looking at ways to gain exposure to the technology segment and tech-heavy Nasdaq-related exchange traded funds.
Tech companies have been among the best performers of the market, with the S&P 500 Information Technology Sector rising 13.8% and the tech-heavy Nasdaq Composite increasing 12.4% year-to-date, compared to the 6.6% gain in the S&P 500.
The technology segment has been a key component of the growth trade, especially with strong earnings numbers coming out, leading the rally in U.S. markets higher.
For instance, Amazon (NasdaqGS: AMZN) shares were almost 4% higher in after hours trading Thursday after the e-commerce giant revealed first-quarter revenue and profit that surpassed analysts’ estimates, driven by sustained growth in both online retail sales and its cloud business.
Investors who are interested in accessing the growth opportunity of the tech segment have looked to diversified investment options like Nasdaq-related ETFs, including the PowerShares QQQ (NasdaqGM: QQQ), which tracks the Nasdaq-100 Index, along with equal-weight equivalents such as the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSEArca: QQQE) and the First Trust NASDAQ-100 Equal Weighted Index Fund (NasdaqGM: QQEW).
QQQ fully replicates the Nasdaq 100 Index, which includes the 100 largest non-financial stocks listed on the Nasdaq by market capitalization. This is a tech-heavy index, so technology companies make up more than half of the portfolio, including big names like Apple (NasdaqGS: AAPL) 11.8%, Microsoft (NasdaqGS: MSFT) 8.2%, Amazon 6.8%, Facebook (NasdaqGS: FB) and Alphabet (NasdaqGS: GOOG) 4.7%.