With the technology sector evolving at a rapid pace, some exchange traded funds are offering investors exposure to a new wave of disruptive tech and themes. One such fund is the iShares Exponential Technologies ETF (NasdaqGS: XT).
XT, which recently turned four years old, “seeks to track the investment results of an index composed of developed and emerging market companies that create or use exponential technologies,” according to iShares. The ETF tracks the Morningstar Exponential Technologies Index and holds nearly 200 stocks.
A slew of disruptive technologies are garnering headlines right now, potentially underscoring the case for unique approaches to tech investing.
“More tech disruptions are on the way, powered by fifth generation (5G) wireless technology and artificial intelligence (AI),” said BlackRock in a recent note. “These technologies are still in their early days, but the race among companies across industries to tap their potential should underpin future tech revenues and earnings.”
Examining XT ETF
The $2.36 billion XT allocates a third of its weight to technology stocks and over 32% percent to healthcare names. None of XT’s holdings exceed weights of 0.71%.
“XT is designed to provide global exposure to companies identified as leaders across key areas of technological transformation from big data and analytics to nanotechnology and bioinformatics. These companies, which also cross industry sectors such as manufacturing, financial services and healthcare, have the potential to profoundly transform society and may offer substantial investment growth opportunities,” according to BlackRock.
XT is potentially positioned to benefit from the aforementioned AI and 5G themes.
“High-speed 5G mobile technology is a step-change from the previous four generations. Greater bandwidths and faster Internet speeds are just the start,” according to BlackRock. “The key attributes of 5G–massive data capacity and ultra-fast speeds–could empower and accelerate the application of AI across industries, enabling advances in areas from driver-less cars to smart cities and tele-medicine. 5G trials have started, but wider deployment is unlikely until the early 2020s. Wireless carriers looking to gain a first-mover advantage are already deploying the pricey infrastructure backbone, to achieve a boost to existing 4G offerings while setting up to transition to 5G.”
XT is up almost 13% this year. XT charges 0.47% per year, or $47 on a $10,000 investment.
For more information on the tech sector, visit our technology category.
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.