5 Tech ETFs to Plug In to Big Profits
Once again, the technology sector and tech ETFs are hot in 2019. At thebeginning of May, the tech-heavy Nasdaq-100 and S&P 500 Technology indexeswere up 22.70% and 27.10%, respectively, year-to-date.Interestingly, tech ETFs are performing well even against the backdrop ofdeclining net profit margins.“Ten of the 11 sectors are reporting a year-over-year decline in their netprofit margins in Q1 2019, led by the Communication Services (11.5% vs.13.6%), Energy (4.4% vs. 6.2%), and Information Technology (20.7% vs. 22.3%)sectors,” said FactSet in a recent note.InvestorPlace – Stock Market News, Stock Advice & Trading TipsFortunately for tech ETFs, the group could be supported by a familiar face:Apple (NASDAQ:AAPL). Apple, often one of the largest holdings in a slew oftech ETFs, recently reported blow-out fiscal second-quarter results.Importantly, the company forecast fiscal third-quarter revenue of $52.5billion to $54.5 billion, boosted its dividend, added $75 billion to itsrepurchase program and forecast a gross margin of 37% to 38% for the currentquarter.With the growth factor still largely in favor, investors may be able to findmore upside through the rest of 2019 with some of the following tech ETFs.
Fidelity MSCI Information Tech ETF (FTEC)
Source: ShutterstockExpense ratio: 0.0840% per year, or $8.40 on a $10,000 investment.Tech ETFs can be more volatile than some other sector funds, but there isstrong evidence confirming long-term investors are rewarded by sticking withtech. And if you’re going to hold a tech ETF for the long haul, you ought todo that in cost-effective fashion. The Fidelity MSCI Information Tech ETF(NYSEARCA:FTEC) is one way of accomplishing that objective as it’s thecheapest tech ETF on the market today.Home to 308 stocks, FTEC is a basic and broad tech ETF. The fund is cap-weighted, so heavyweights, such as Apple and Microsoft (NASDAQ:MSFT) dominatethe fund. Those two stocks combine for nearly 31% of FTEC’s weight. None ofthe fund’s other holdings command weights north of 3.55%. Frugal investors getanother benefit with FTEC: they can trade the tech ETF commission-free onFidelity’s platform.Story continuesFTEC is up nearly 28% year-to-date and resides near all-time highs, butMicrosoft could soon provide this tech ETF with another boost. Next week,Microsoft holds a meeting in Seattle and analysts are expecting some importantcommentary regarding the company’s booming cloud business.Oppenheimer analyst Timothy Horan “sees Microsoft’s heavy investments inartificial intelligence and the Internet of Things as important factors thatcould create demand for cloud-computing capacity over the next decade. Salesat the company’s Azure cloud-computing segment soared 73% year over year inthe fiscal third quarter,” reports Barron’s.
First Trust NASDAQ Technology Dividend Index Fund (TDIV)
Source: ShutterstockExpense ratio: 0.50%As noted above, Apple recently boosted its dividend. Microsoft has been astout dividend grower in its own right in recent years. In other words, thereare plenty of opportunities for dividend growth investors in the technologysector and the First Trust NASDAQ Technology Dividend Index Fund(NASDAAQ:TDIV) is the tech ETF dedicated to that theme.“Tech giants spent a combined $50 billion on dividends last year. Dividendgrowth was one percentage point higher than the previous year, but smallerthan the acceleration in 2016,” according to Bloomberg.TDIV does not have a dividend growth qualification per say, but the tech ETFrequires components to have a dividend yield of at least 0.50% and to havepaid a dividend over the past year while excluding companies that cut orsuspended payouts. This $999.3 million tech ETF is up nearly 21% year-to-date.
Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE)
Source: ShutterstockExpense ratio: 0.35%The widely followed Nasdaq-100 Index is not a dedicated technology benchmark,but it is pretty close. Investors looking for reduced single-stock risk whilestill getting access to the Nasdaq-100 may want to consider an equal-weighttech ETF, such as the Direxion NASDAQ-100 Equal Weighted Index Shares(NYSEARCA:QQQE).QQQE follows the NASDAQ-100 Equal Weighted TR Index, the equal-weightequivalent of the Nasdaq-100 Index. None of QQQE’s holdings exceed weights of1%. That’s right: 1% is the weight this tech ETF assigns to the likes of Appleand Microsoft.This data point may surprise some tech investors: QQQE is actually tradingslightly ahead of the cap-weighted Nasdaq-100 this year. While QQQE does notalways outpace the cap-weighted Nasdaq-100, it is worth nothing the equal-weight tech ETF’s maximum drawdown over the past three years was significantlylower than that of the cap-weighted benchmark.
Global X Cloud Computing ETF (CLOU)
Source: ShutterstockExpense ratio: 0.68%Having debuted just last month, the Global X Cloud Computing ETF (NASDAQ:CLOU)is the newest tech ETF highlighted here. It is also the second dedicated cloudcomputing ETF in the U.S. CLOU, which is actually pricier than the establishedfund it competes against, tracks the Indxx Global Cloud Computing Index.However, CLOU does not allocate more than 5.48% of its weight to any of itsholdings and the overlap between CLOU and the competing fund is just 17% byweight, meaning this new tech ETF can potentially deliver significantlydifferent returns than its older rival. With cloud computing, investors aretapping a fast-growing niche.“The global cloud computing market is estimated to be worth well-over $300billion by 2022, up from about $188 billion today and growing at a compoundannual growth rate (CAGR) of 14.6%,” according to Global X research. “Andwhile cloud computing is primarily a business innovation, it has had massiveimplications for how products and services are delivered to customers, fromsocial media and video streaming to education platforms and gaming.”
VanEck Vectors Semiconductor ETF (SMH)
Source: ShutterstockExpense ratio: 0.35%The strength of semiconductor stocks has been a major boon for tech ETFs thisyear. Just look at the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH), whichis up 32.17% year-to-date. Semiconductor companies are highly cyclical andwith the group up so much to start to 2019, some market observers haveconcerns about the rally’s veracity.There might be something to that prognosis simply because global semiconductordemand hit a record high last year, meaning 2019 comp’s will be tough for theindustry to top. Additionally, some analysts see global chip demand as stillin a downturn, one that may not be broken until next year, given historicaldownturn trends in the semiconductor space.The good news for tech ETFs and dedicated semiconductor plays, such as SMH, isthat emerging technologies, such as 5G and artificial intelligence, areexpected to bolster chip demand.Todd Shriber does not own any of the aforementioned securities.
More From InvestorPlace
Compare BrokersThe post 5 Tech ETFs to Plug In to Big Profits appeared first onInvestorPlace.Top 4 Domain Names For Software And Tech CompaniesFor years (pre-2013) thinking of the best domain name to represent our blog,company, brand, or any site was our only concern. As more of the world movesto the Web and things start to feel a little crowded, we now have more optionsto consider when deciding which domain extension is the best for our site aswell.As the world moves further away from the oversaturated ‘.com’ extension, wesee more companies move towards industry-specific domain extensions —especially in the tech world. This is due to the scarcity of short, uniquedomains for decent prices.Therefore, when starting a tech site, it’s important to know the rightextension to pick. Here we’ll discuss the top tech domain extensions and theiruses.First, when choosing a domain extension, there’s a couple of criteria toconsider: 1. Availability – the odds of domain.com being available are pretty low, but you’re much more likely to score with domain.ly 2. Affordability – even if domain.com was available, it would cost you your first five years of revenue to pay for it, unlike something like domain.ai. 3. Meaningfulness – you need something your users can remember any time, like my.tech. 4. Searchability – let’s be honest, this one is huge because it affects search rankings, which then affect profit. 5. Brandability – in a saturated market, a brand message is important. You need a domain to match that, there’s no way around that.
The .ai domain extension began as a ccTLD for the country of Anguilla but wasquickly adopted by the tech community due to it being the acronym forartificial intelligence. This extension has become especially popular in thelast few years. For a while, the term “cloud” was the “it” word in tech, noweverywhere you go, it’s all about artificial intelligence.The .ai extension is currently the 11th most likable ccTLD used in NorthAmerica today. Unlike some other ccTLDs, both individuals and organizationsare allowed to register for .ai domain without any additional requirements.Due to the recent explosion of this domain extension, domainers are buying upa lot of the popular keywords for it. Thankfully, you can still get a decentlypriced ‘.ai’ domain from registrars like 101domain.
Now over to you
What’s your favorite domain extension for a tech company? Why? Please shareyour insights with us!3 ASX tech shares to buy in AprilImage source: Getty ImageIn early March, analysts at Macquarie Group Ltd (ASX: MQG) made a statement,believing “investors will be drawn back to Tech” following the bear marketcreated by COVID-19.This was based on COVID-19, despite being worse than SARS, following a similarplaybook with technology companies leading the SARS market rebound.With that in mind, below are three ASX tech shares to consider buying in Aprilin anticipation of the recovery.The Audinate share price has been crushed since the beginning of the bearmarket. At one point, it was down to just $2.51 per share, a staggering 70%below its February highs. Since then, Audinate has followed the market backhigher to sit at $4.12 at the time of writing. However, this is still morethan 50% lower than its February highs of $8.50 a share.
Who is Audinate?
Audinate is a leading provider of professional digital audio networkingtechnology. Its Dante platform allows distribution of uncompressed, multi-channel digital media over a standard ethernet network with near zero latency.This means heavy expensive cabling is no longer required, with existingnetworks sometimes able to be taken advantage of.Audinate’s first-half results showed a 3.8 percentage point increase in grossmargin to 77.1%, driving its gross profit 20% higher over the priorcorresponding period. The company has not yet released an announcement inresponse to COVID-19 but has a strong cash position on its balance sheet tohelp it navigate the turbulent waters.NEXTDC is an S&P/ASX 200 Index (ASX: XJO) company that provides data centreoutsourcing, connectivity services and infrastructure management software.Unlike most ASX shares during March, NEXTDC actually saw its share price rise,posting a 13% gain for the month. After reporting strong half-year results atthe end of February, NEXTDC shares continue to perform well as isolation andsocial distancing measures increase demand for video calls and cloud-basedsoftware.
NEXTDC announced this morning a trading halt for its shares as the companylooks to raise $672 million. With strong growth recently, these funds are tobe used to continue growing the business. It appears management has timed thecapital raise well with its shares sitting at a high. Meanwhile, othercompanies such as Webjet Limited (ASX: WEB) are forced to raise capital atdeflated prices.I think NEXTDC will continue to see a growing demand for its services. Raisingcapital during a time of share price strength is a smart move to capitalise onits growth prospects. Once NEXTDC shares return to trading, I wouldn’t besurprised to see the share price drop closer to the issue price, providing abetter opportunity for investors.
ETFS Morningstar Global Technology ETF (ASX: TECH)
If you believe a particular sector will rebound strongly but are unsure whichcompany to invest in, an ETF can provide great diversification across anindustry.An investment in the ETFS Morningstar Global Technology ETF provides investorswith global exposure to the technology sector. Companies within this ETF arechosen based on Morningstar’s MOAT methodology. This method selects companiesthat are market leaders with distinct competitive advantages. The TECH ETF islargely invested in US tech shares, with smaller investments in Japan,Germany, Switzerland, Israel and France as of April 1, 2020.