The ALPS Disruptive Technologies ETF (CBOE: DTEC) is up almost 19% year-to-date and hit an all-time high on Aug. 5. As impressive as those traits are, there’s more to the DTEC story and that “more” confirms the utility of the fund in today’s technology investing climate.
DTEC tracks the Indxx Disruptive Technologies Index, which identifies companies using disruptive technologies across ten thematic areas, including Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics, and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments.
Translation: DTEC offers broader coverage to the fast-growing tech segments of tomorrow than many traditional funds in this category.
Big Growth for Some Themes
Cybersecurity sector-related ETFs have benefited from the shift to working at home as more organizations see the benefit of increasing investments in cybersecurity solutions.
The industry is expected to capitalize on the increased spending for cybersecurity as more companies adjust to working remotely. According to a LearnBonds.com report, 70% of organizations see the value of raising investments in cybersecurity solutions, and around 55% of major organizations will bolster their investments in automation solutions, Security Magazine reports.
Declining costs in cloud adoption and increasing ease of use are among the factors driving the cloud computing boom. Infrastructure-as-a-Service companies provide the computing infrastructure, delivered over the internet, that enables other firms to build services more efficiently. It helps scale computing demand and avoid the high expenses and complexity of buying and managing infrastructure.
Data confirm DTEC’s healthcare innovation exposure is compelling, too. Healthcare spending made up 18% of U.S. GDP, and it is rising. Looking ahead, by 2020, it is projected that global healthcare spending could shoot up to $8.7 trillion as the industry faces increased challenges from an aging population, rising costs, shortage of skilled workers, dealing with legacy IT, invasive procedures, and medical errors.
AI-powered diagnostics, surgical robots, genomic analysis, new drug discovery, streamlined clinical trials, and smart monitoring devices. A.I. in health care could balloon to a $6.6 billion industry by 2021 form the $600 million back in 2014.
Other technology funds to consider include the Technology Select Sector SPDR ETF (NYSEArca: XLK) and the Fidelity MSCI Information Technology Index ETF (FTEC).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.