Investing in Innovation: 5 Best Tech and Disruptive ETFs

In this article, we discuss 5 best tech and disruptive ETFs to buy. If you want to read our discussion on the tech landscape, head directly to Investing in Innovation: 10 Best Tech and Disruptive ETFs. 

5. Invesco QQQ Trust (NASDAQ:QQQ)

5-Year Share Price Performance as of March 20: 145.61%

Invesco QQQ Trust (NASDAQ:QQQ) provides investors with exposure to a diverse range of NASDAQ-100 companies, offering a convenient way to invest in innovative firms through a single fund. Since its inception in 1999, the fund has consistently outperformed the S&P 500 Index. As of March 20, 2024, Invesco QQQ Trust (NASDAQ:QQQ) boasts assets under management totaling $255.18 billion and a total expense ratio of 0.20%. Invesco QQQ Trust (NASDAQ:QQQ) is one of the best tech ETFs to buy. 

Microsoft Corporation (NASDAQ:MSFT) is the biggest holding of Invesco QQQ Trust (NASDAQ:QQQ). J.P. Morgan analysts highlight Microsoft Corporation (NASDAQ:MSFT)’s Copilot for Security AI chatbot as a catalyst for a significant shift in the company’s security capabilities, foreseeing potential benefits from IT vendor consolidation as these tools are integrated across Microsoft’s technology stack. The analysts maintain an Overweight rating on Microsoft shares with a $440 price target on March 14. J.P. Morgan expressed optimism about Microsoft’s security opportunity, particularly in generative AI, citing its strengths in code generation, pattern recognition, and automated remediation. The firm anticipates gradual monetization of these products, akin to other Copilot tools, with accelerated adoption in the future.

According to Insider Monkey’s fourth quarter database, 302 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 306 funds in the last quarter. 

Carillon Eagle Growth & Income Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) performed well after reporting strong earnings supported by accelerated growth from Azure. The cloud business is seeing consistent trends from optimization while AI has contributed strongly to its growth.”

4. iShares Expanded Tech Sector ETF (NYSE:IGM)

5-Year Share Price Performance as of March 20: 150.00%

iShares Expanded Tech Sector ETF (NYSE:IGM) tracks the S&P North American Expanded Technology Sector Index, which includes North American equities from the technology sector as well as select companies from communication services to consumer discretionary sectors. As of March 19, 2024, iShares Expanded Tech Sector ETF (NYSE:IGM) holds net assets worth $4.27 billion, with a portfolio comprising 278 stocks and an expense ratio of 0.41%. It is one of the best tech ETFs to invest in. 

Apple Inc. (NASDAQ:AAPL) is the largest holding of the iShares Expanded Tech Sector ETF (NYSE:IGM). Barclays reported lower February hardware builds for Apple Inc. (NASDAQ:AAPL) compared to January, with App Store growth up 15% year-over-year. Weak iPhone builds continue, driven by softer demand and market share loss in China, though emerging markets show some strength. Barclays anticipates no significant design changes for the iPhone16, expected by 2025. They maintain a Neutral rating on Apple Inc. (NASDAQ:AAPL) with a price target of $158 on March 11. 

According to Insider Monkey’s fourth quarter database, 131 hedge funds were long Apple Inc. (NASDAQ:AAPL), compared to 134 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 905.56 million shares worth $174.3 billion. 

Orbis Global Equity Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:

“Never before has following the crowd made so much money. Nor, in our estimation, so little sense. But just look at the opportunities the crowd has left for those of us willing to take a different view. We could wax lyrical about the glaring difference in value between Korean banks priced at 4 times earnings, versus Apple Inc. (NASDAQ:AAPL) at 28 times, despite diverging fundamentals—Apple is increasingly at risk of bans in China, while Korean banks could double their dividends.”

3. iShares U.S. Tech Independence Focused ETF (CBOE:IETC)

5-Year Share Price Performance as of March 20: 156.75%

iShares U.S. Tech Independence Focused ETF (CBOE:IETC) aims to offer exposure to US companies with technology exposure, emphasizing those with a higher proportion of technological capabilities, revenues, and production in the US and select global markets. As of March 19, 2024, iShares U.S. Tech Independence Focused ETF (CBOE:IETC) has net assets totaling $225 million, with a portfolio comprising 151 stocks and a net expense ratio of 0.18%. It is one of the best tech ETFs to monitor. 

Broadcom Inc. (NASDAQ:AVGO) is one of the top holdings of the iShares U.S. Tech Independence Focused ETF (CBOE:IETC). On March 20, Barclays reinstated an Overweight rating on Broadcom Inc. (NASDAQ:AVGO), citing its strong positioning to capitalize on the “second wave of AI.” They anticipate significant growth in the mid- to high-20% range next year, driven primarily by AI and custom silicon/switching businesses. Barclays set Broadcom’s price target at $1,405 based on these projections.

According to Insider Monkey’s fourth quarter database, 91 hedge funds were bullish on Broadcom Inc. (NASDAQ:AVGO), compared to 87 funds in the last quarter. 

Carillon Eagle Growth & Income Fund stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its fourth quarter 2023 investor letter:

“Broadcom Inc. (NASDAQ:AVGO) traded higher after closing on its acquisition of VMware. The company also announced earnings that were relatively in line with estimates with some benefit of better operating expenses. The stock appears to be one of the first real beneficiaries of generative artificial intelligence (AI) with meaningful revenue expected to show up in 2024.”

2. Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT)

5-Year Share Price Performance as of March 20: 161.79%

Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT) ranks 2nd on our list of the best tech ETFs. Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT) aims to mirror the performance of the Information Technology Spliced Index, which comprises companies serving electronics and computer industries or producing products based on applied science. As of February 29, 2024, the ETF holds a portfolio of 315 stocks with net assets totaling $76 billion. Its expense ratio stands at 0.10%. Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT) is one of the best tech ETFs to invest in.  

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the top holdings of Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT). On March 4, Advanced Micro Devices, Inc. (NASDAQ:AMD) expressed confidence in meeting its $3.5 billion target for 2024 data center GPU revenue, with estimated 10% market share. Advanced Micro Devices, Inc. (NASDAQ:AMD) also showed optimism in the server CPU market, citing enterprise share gains and renewed growth in the total addressable market.

According to Insider Monkey’s fourth quarter database, 120 hedge funds were bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD), compared to 110 funds in the prior quarter. 

Jackson Peak Capital stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:

“On the long side of the portfolio, a core theme we remain invested behind is the data center infrastructure buildout and AI chips arms race that we’ve discussed since our first letter in Q2. Some skepticism has crept into the market, and it’s understandable given the huge ramp in 2023. However, our research continues to suggest 2023 was the start of a multi-year platform shift. Value will accrue to varying segments of the AI value chain at different parts of the cycle. We continue to see value in the “boots on the ground” winners in the data center buildout (Vertiv, Modine Manufacturing, Celestica). Our positioning in AI semiconductor companies (NVDA and Advanced Micro Devices, Inc. (NASDAQ:AMD)) has ebbed and flowed given we are cognizant (perhaps too much so) that these names are crowded positions across investor style types. We’ve done well in these chip stocks since inception and NVDA is currently a long, and we’re trying to “let winners run” while using sizing to risk manage these names due to the market-wide positioning bias in semiconductors.”

1. iShares U.S. Technology ETF (NYSE:IYW)

5-Year Share Price Performance as of March 20: 182.16%

iShares U.S. Technology ETF (NYSE:IYW) aims to mirror the performance of the Russell 1000 Technology RIC 22.5/45 Capped Index, which consists of US technology sector equities. As of March 19, 2024, the fund holds net assets totaling $16.2 billion, with a portfolio comprising 131 stocks and an expense ratio of 0.40%. It was launched on May 15, 2000. iShares U.S. Technology ETF (NYSE:IYW) is one of the best tech ETFs to invest in. 

Salesforce, Inc. (NYSE:CRM) is the largest holding of the iShares U.S. Technology ETF (NYSE:IYW). On February 28, Salesforce, Inc. (NYSE:CRM) declares $0.40 per share quarterly dividend, which is distributable on April 11 to shareholders on record as of March 14. The company also boosted its share buyback plan by $10 billion.

According to Insider Monkey’s fourth quarter database, 131 hedge funds were bullish on Salesforce, Inc. (NYSE:CRM), up from 122 funds in the prior quarter. 

Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its fourth quarter 2023 investor letter:

“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, and Salesforce, Inc. (NYSE:CRM).

Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”

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