Disruptive technology is back in the spotlight, with well-known funds such as the ARK Innovation ETF (ARKK) and the Goldman Sachs Innovate Equity ETF (GINN) raking in double digit returns over the past week after an extended period of negative returns.
The ALPS Disruptive Technologies ETF (DTEC), however, is seeing the same rebounding strong returns for a lower cost, charging an expense ratio of 50 basis points.
DTEC is an ideal holding for investors looking to capitalize on global companies that enter traditional markets with new digital forms of production and distribution, and are likely to disrupt an existing market or value network.
“DTEC provides exposure to faster growing, smaller companies outside of the major indexes like S&P 500 or the Nasdaq 100 tracked by popular ETFs adding diversification benefits for advisors,” said Todd Rosenbluth, head of research at ETF Trends and ETF Database.
DTEC covers 10 different themes within the tech sector: healthcare innovation, internet of things, clean energy & smart grid, cloud computing, data & analytics, fintech, robotics & AI, cybersecurity, 3D printing, and mobile payments, all with a focus on disruptive technologies and innovation, according to ALPS.
The index selects 10 companies from each theme according to a proprietary model and equally weights each security. This effectively gives each theme and each company equal representation. The fund is not limited to a specific geography and can select companies from developed and emerging markets alike, providing investors with global all-cap equity exposure, according to ALPS.
Cybersecurity was the leader in February among DTEC’s 10 disruptive technology themes as heightened Russian cyberattacks were and continue to be expected, while fintech was the laggard after several high valuation names fell over 20%.
The cybersecurity theme led February with Check Point Software Technologies Ltd. Inc. (CHKP) leading all segment names forward, returning 19.73%. Check Point received a price target raise from BMO Capital, citing Check Point’s strong growth position in the security market as the reason for the upgrade, according to ALPS.
The clean energy & smart grid segment was the second best performing segment in DTEC last month, returning 6.28%. SolarEdge Technologies Inc. (SEDG) was the top performer, and Vestas Wind Systems A/S (VWS DC) gained 22.93% last month as global tensions propelled clean energy names forward as counties weigh their reliance on fossil fuels.
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