Even as U.S. equities continue to see a resurgence in the first quarter of 2019, investors can still see a wall of worry growing in the backdrop, which is sparking concerns of a global economic slowdown. Even if a permanent trade deal between the U.S. and China gives equities a healthy boost in the short-term, it won’t allay long-term concerns–this is where defensive positioning comes into play.

Whether it’s delving into safe havens like commodities or more specifically, precious metals like gold, investors are looking to play defense despite the run up in equities as of late. Additionally, investors are looking to play more defense against volatility, but at the same time, don’t want to do so at the expense of higher costs.

That being said, the search for low-cost alpha hasn’t stopped investors from pouring into the technology sector. Last week, the Nasdaq Composite hit a closing high with the help of strength from the likes of Amazon and more upside could be ahead if Apple posts strong earnings on Tuesday.

The markets were also boosted by better-than-expected first-quarter GDP numbers published by the Commerce Department. Despite a number of roadblocks heading into 2019 after a rough fourth-quarter market showing to end 2018, the U.S. economy rebounded in the first quarter this year, beating analysts’ expectations of 2.5 percent growth with a 3.2 percent growth number.

“Tech flows are white hot,” Steven DeSanctis, a U.S. equity strategist for Jefferies, wrote in a note to clients Sunday.

Here is a list of tech equity ETFs with the lowest expense ratios:

SymbolETF NameExpense Ratio
FTECFidelity MSCI Information Technology Index ETF0.08%
VGTVanguard Information Technology ETF0.10%
XLKTechnology Select Sector SPDR Fund0.13%
IETCiShares Evolved U.S. Technology ETF0.18%
PSCTInvesco S&P SmallCap Information Technology ETF0.29%
XSDSPDR S&P Semiconductor ETF0.35%
SMHVanEck Vectors Semiconductor ETF0.35%
XSWSPDR S&P Software & Services ETF0.35%
XTHSPDR S&P Technology Hardware ETF0.35%
XNTKNYSE Technology ETF0.35%

 

Low Cost Hurting Active Funds?

The latest Morningstar Active/Passive Barometer report revealed that only 38 percent of active U.S. equity funds survived and outperformed their average passive counterparts in 2018, which represents a 9 percent drop from 2017. With the increasingly dismal performance by active funds, it argues the case for more investors to use ETFs, particularly the passive variety.

The number of passive ETFs are over 1,100 compared to active, which comprises over 250. This availability of passive options makes the case for investors to seek ETFs compared to their mutual fund brethren, which are typically actively-managed and carry higher operation costs.

Once more, with investors focusing on costs, the latest performance figures by active management simply doesn’t justify their expenses.

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