Technology ETF, Tech ETF

Technology ETF (Tech ETF) is the exchange traded fund that invests in the world’s growing technologies. The whole world in the 1990s saw the power of the Internet and technology in full force. Both BPO and IT emerged as the major offshoots of this technological development and opened the door to technology ETFs.[br]

Technology ETF (Tech ETF) is the exchange traded fund that invests in the world’s growing technologies. The whole world in the 1990s saw the power of the Internet and technology in full force. Both BPO and IT emerged as the major offshoots of this technological development and opened the door to technology ETFs.[br]

 

The Categories of Technology ETF

Depending on their holdings, technology ETFs can be classified into three categories:

• Sub Sectors Technology ETFs: These ETFs have specific holdings such as software and semi conductors.

• Broad Tech Sectors Technology ETFs: These ETFs have a broad range of technological holdings and have a meaty portfolio.

• Actively Managed Technology ETFs: These ETFs are actively managed and their progress is updated daily on websites and other medium of communication.

 

The Most Popular Technology ETFs
 

Depending on the category you invest in, these are the most popular technology ETFs that have been consistent in the past few years:[br]

• Sub-sector

  •  Goldman Sachs Networking Index Fund (ticker: IGN) This ETF has a high liquidity and concentration on just one sector.

  • Semiconductor HOLDR (SMH): Due to the ever increasing role of semi conductors in technology, these ETFs are extremely popular with traders.

  • Internet HOLDR: They do not have the Google IPO, but they are still a major player in the sub sector technology ETFs.

  • Broadband HOLDRs: With increasing pressure for fast Internet and file exchange platforms, the growth in these ETFs is tremendous.

• Broad

  • S&P Select Sector SPDR Fund (XLK): This ETF holds large technology stocks in the S&P 500.

  • Shares Dow Jones U.S. Technology Fund (IYW): This is the largest technology ETF with the most number of stocks than any other tech ETF.

• Actively Managed

  • Powershares Dynamic ETFs

    • Networking (PXQ)
    • Semiconductors (PSI)
    • Software (PSJ)

 

Advantages and Disadvantages of Technology ETF

 

Like all other ETFs, technology ETF has similar problems and advantages. They yield great profits at lower investments resulting in a higher ROI. However, the profits may be smaller than other investments.

 

Investing in a technology ETF is an effective way of increasing diversity in technology focused or general portfolios. However, the focus should be to on both the holdings of these ETFs as well as the cost. Too much diversified holdings may not get the amount of profits that you may wish.