After a dismal May performance, where stocks were plagued by fears of a dual front trade war and global economic uncertainty, this past week technology stocks had their best six day stretch in 7 1/2 years, according to Dow Jones market data, as quoted by the Wall Street Journal. A number of factors have been are at work.
Elevated valuations following May’s onslaught and trade war-spurred stock slide have been serving as catalysts for the stock market rally. The Fed has also been taking a more moderate stance for 2019, which is encouraging positive investor sentiment and driving the market higher, as investors anticipate more rate cuts in the coming months.
In addition to other motivations, China stimulus is also anticipated, and President Trump has also postponed some of the tariffs on Mexico, cooling down the US-Mexico trade conflict, and relaxing investor minds, as talks with China are now pushed off until late June. Finally, the technology sector is being boosted by global spending on emerging technologies such as cloud computing and artificial intelligence, two of the sectors strengths.
Investors combing the market for technology ETFs to focus on that would benefit from the prevailing economic conditions might look into the five ETFs listed below. All of these ETFs have performed exceedingly well over the past five trading sessions.
The Technology Select Sector SPDR ETF (XLK) seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Technology Select Sector Index. Under normal market conditions, the fund generally invests substantially all, but at least 95%, of its total assets in the securities comprising the Index.
The First Trust Nasdaq Semiconductor ETF (FTXL) is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before the Fund’s fees and expenses, of an index called the Nasdaq US Smart Semiconductor Index. The Fund seeks to replicate the holdings and weightings of the Nasdaq US Smart Semiconductor Index so as to generate performance results 95% correlated to that of the Nasdaq US Smart Semiconductor Index.
The Vanguard Information Technology ETF (VGT) seeks to track the performance of a benchmark index that measures the investment return of stocks in the information technology sector. The fund is passively managed, using a full-replication strategy when possible and a sampling strategy if regulatory constraints dictate.
The Fidelity MSCI Information Technology Index ETF (FTEC) seeks to provide investment returns that correspond, before fees and expenses, generally to the performance of the MSCI USA IMI Information Technology Index. The fund invests at least 80% of assets in securities included in the fund’s underlying index. The fund’s underlying index is the MSCI USA IMI Information Technology Index, which represents the performance of the information technology sector in the U.S. equity market. It may or may not hold all of the securities in the MSCI USA IMI Information Technology Index. The fund is non-diversified.
The iShares U.S. Technology ETF (IYW) seeks to track the investment results of an index composed of U.S. equities in the technology sector. The fund offers exposure to U.S. electronics, computer software and hardware, and informational technology companies, and targeted access to domestic technology stocks.
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