In this article we discuss the 10 best tech ETFs to buy according to Reddit. If you want to skip our detailed analysis of these ETFs, go directly to the 5 Best Tech ETFs to Buy According to Reddit.
The technology sector has been a huge driver of the stock market in the United States through the lows of the COVID-19 pandemic, with the five big technology stocks now accounting for more than 20% of the S&P 500. However, as tech giants such as Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG) grew larger, other technology companies continued to match this pace. Over the past year, S&P 500 Tech Sector Index has outperformed the wider market with almost double the returns of the S&P 500.
The exchange traded-funds (ETFs) that focus on the technology sector have been riding the highs of the growth of Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), and Alphabet Inc. (NASDAQ: GOOG) stock. In recent months, the onset of retail investors in the market, who use social media platforms like Reddit as their primary source of information on the finance world, have taken a lively interest in tech ETFs as well. Some of the best year-to-date performers in this category are mentioned below.
For an insight into the tech ETF craze over the past few months, it is worth noting that at the end of August 2020, the height of the pandemic, the top performing ETFs in the US had added a whopping $34 billion in assets under management, a number that represented a year-to-date growth of 71%. Over a period of eight months beginning January 2020, these funds managed an average return of 37% on investments against the 7% total return of the S&P 500 during the time and a 10% growth for other US-based ETFs.
ETFs have become popular partly because of the risk associated with investing in technology-related growth stocks that often plummet in value as new technology enters the market. Instead of pouring money into individual firms, smart investors tend to opt for funds that spread their money over a diverse range of companies in the sector, thereby shielding them from potential risks associated with standalone stocks. In a way, ETFs allow investors to ride a new trend across the entire industry spectrum.
One other reason for the resounding success of tech ETFs has been the overall boom in the tech sector that has seen share prices rise across the board in sub sectors such as software, manufacturing, hardware, and Internet of Things. Technology stocks have caused waves in other market segments too, illustrated by the rapidly evolving market dynamics of the finance world as crypto and fintech take the world by storm. These changes have pummeled entire investment portfolios over the past few months.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 best tech ETFs to buy according to Reddit. These ETFs are extremely popular in Reddit communities.
Best Tech ETFs to Buy According to Reddit
10. Invesco NASDAQ Internet ETF (NASDAQ: PNQI)
Invesco NASDAQ Internet ETF (NASDAQ: PNQI) is a non-diversified exchange traded fund that tracks the investment returns of the NASDAQ CTA Internet Index which comprises companies that are engaged in internet-related businesses and trade on the New York Stock Exchange, the Cboe Exchange, or the NASDAQ Stock Market. The ETF invests almost 90% of total assets in stocks of the underlying index. PNQI ranks 10th in the list of best tech ETFs to buy according to Reddit.
Invesco NASDAQ Internet ETF (NASDAQ: PNQI) has more than $1 billion in net assets under management. It has a year-to-date daily total return of 3.85% and a net expense ratio of 0.60%. The 52-week price range of the ETF lies between $163 and $264.
One of the top holdings of the fund is Facebook, Inc. (NASDAQ: FB), the California-based technology firm that owns numerous social platforms. At the end of the first quarter of 2021, 257 hedge funds in the database of Insider Monkey held stakes worth $40 billion in Facebook, Inc. (NASDAQ: FB), up from 242 in the preceding quarter worth $38 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ: FB) was one of them. Here is what the fund said:
“Facebook has come in and out of the portfolio before and did so this quarter on the back of substantial improvement in projected free cash flows such that its valuation now meets the criteria for inclusion.”
9. First Trust NASDAQ-100-Technology Sector Index Fund (NASDAQ: QTEC)
First Trust NASDAQ-100-Technology Sector Index Fund (NASDAQ: QTEC) is an exchange traded fund that tracks the investment results of the NASDAQ-100 Technology Sector Index which is an equal weighted index comprising companies that fall under the technology category as outlined by the Industry Classification Benchmark. The fund invests almost 90% of total assets in stocks of the technology index. QTEC ranks 9th in the list of best tech ETFs to buy according to Reddit.
First Trust NASDAQ-100-Technology Sector Index Fund (NASDAQ: QTEC) has more than $3.4 billion in net assets under management and the year-to-date daily total return of the fund is a healthy 6.38%. The price of the fund has hovered between $101 and $157 over the past 52 weeks.
One of the premier holdings of the fund is Adobe Inc. (NASDAQ: ADBE), the California-based computer software company. At the end of the first quarter of 2021, 107 hedge funds in the database of Insider Monkey held stakes worth $12.1 billion in Adobe Inc. (NASDAQ: ADBE), down from 114 the preceding quarter worth $11.9 billion.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Adobe Inc. (NASDAQ: ADBE) was one of them. Here is what the fund said:
“Adobe and Autodesk are both prime examples of the rotation that occurred during the quarter. Both are dominant businesses in their respective markets, which are experiencing structural tailwinds. Despite each business’s position of strength, the stocks of cyclicals and businesses with higher leverage and lower profitability were more favored this past quarter. In stark contrast, Adobe and Autodesk both have low leverage, high levels of profitability, high recurring revenues that mitigate cyclicality, and are both capital-light business models—all attributes we appreciate as investors. Adobe and Autodesk were also two of the top three performers within the Portfolio during 2020.”
8. iShares Expanded Tech Sector ETF (NYSE: IGM)
iShares Expanded Tech Sector ETF (NYSE: IGM) is an exchange traded fund that tracks the investment results of companies based in North America that are working in the technology, communications, and consumer discretionary sectors. It is a non-diversified fund that invests 90% of assets in equities on the underlying index. IGM ranks 8th in the list of best tech ETFs to buy according to Reddit.
iShares Expanded Tech Sector ETF (NYSE: IGM) has more than $3.3 billion in net assets under management. The year-to-date daily total return of the fund is 8.21%. The net expense ratio is 0.46% and the 52-week price range of the fund lies between $261 and $392.
The fund has more than 8.5% of total assets invested in Microsoft Corporation (NASDAQ: MSFT), the Washington-based technology company. At the end of the first quarter of 2021, 251 hedge funds in the database of Insider Monkey held stakes worth $58.9 billion in Microsoft Corporation (NASDAQ: MSFT), down from 258 the preceding quarter worth $52.8 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
7. iShares Expanded Tech-Software Sector ETF (BATS: IGV)
iShares Expanded Tech-Software Sector ETF (BATS: IGV) is an exchange traded fund that tracks the investment results of the S&P North American Expanded Technology Software Index which comprises stocks of US-based firms that are working in the software, interactive home, and interactive media industries. It is a non diversified fund that invests 90% of total assets in securities of the underlying index. IGV ranks 7th in the list of best tech ETFs to buy according to Reddit.
iShares Expanded Tech-Software Sector ETF (BATS: IGV) has more than $5.2 billion in net assets under management with a year-to-date daily total return of 0.62%. The net expense ratio is 0.46%, with the 52-week price range of $260-$389.
One of the best holdings of the fund is Zoom Video Communications, Inc. (NASDAQ: ZM), the California-based communications technology company. At the end of the first quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $5.6 billion in Zoom Video Communications, Inc. (NASDAQ: ZM), down from 59 in the previous quarter worth $6 billion.
In its Q4 2020 investor letter, Baron Opportunity Fund, an asset management firm, highlighted a few stocks and Zoom Video Communications, Inc. (NASDAQ: ZM) was one of them. Here is what the fund said:
“Zoom Video Communications, Inc. is a cloud-based software company providing a video-first platform for communication. Shares of Zoom declined during the fourth quarter on profit taking following the strong run in the stock because of accelerated pandemic-driven Zoom adoption, revenue growth, and free cash flow generation. We retain conviction as Zoom remains a leading player in disrupting the $100 billion unified communications market with its scalable, globally distributed, cloud-based, video-first offering, while its well-known brand (Zoom is now a verb!) should enable it to grow profitably as it takes market share.”
6. Technology Select Sector SPDR Fund (NYSE: XLK)
Technology Select Sector SPDR Fund (NYSE: XLK) is an exchange traded fund tracking the investment results of Technology Select Sector Index. It is a non-diversified fund that employs a replication strategy and invests in at least 95% of the underlying stocks in the index. XLK ranks 6th in the list of best tech ETFs to buy according to Reddit.
Technology Select Sector SPDR Fund (NYSE: XLK) has more than $40 billion in net assets under management with a year-to-date total daily return of 6.17%. The net expense ratio of the fund is 0.12% with a 52-week price range of $97-$143.
The fund has more than 3.5% of assets under management invested in Mastercard Incorporated (NYSE: MA), the New York-based payments company. Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE: MA) with 5.8 million shares worth more than $2 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE: MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
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Disclosure: None. 10 Best Tech ETFs to Buy According to Reddit is originally published on Insider Monkey.
