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Top 10 Technology ETFs

IGN (iShares Networking ETF) tracks the S&P North American Technology-Multimedia Networking Index. The fund was launched in July 2001. The expense ratio is .48%. AUM equal nearly $190 million with average daily trading volume 126K shares. As of mid-September 2011 the dividend yield is .10% and the YTD return was -21%.

An alternative choice is PXQ (PowerShares Dynamic Networking ETF) which tracks the Dynamic Networking Intellidex Index. The YTD return for PXQ as of mid-September 2011 was -17%. The difference in performance is due to a lower weighting in Cisco (CSCO) and other underperforming constituents. This makes the enhancement of the index methodology marginally more effective in this case.

Data as of 2011-09-06

IGN Top Ten Holdings & Weightings

  1. Cisco Systems Inc (CSCO): 9.90%
  2. Motorola Solutions, Inc. (MSI): 8.92%
  3. Qualcomm, Inc. (QCOM): 8.90%
  4. Research in Motion Ltd (RIMM): 8.35%
  5. Motorola Mobility Holdings, Inc. (MMI): 8.26%
  6. Juniper Networks, Inc. (JNPR): 6.34%
  7. Harris Corporation (HRS): 4.48%
  8. Polycom, Inc. (PLCM): 4.05%
  9. F5 Networks, Inc. (FFIV): 3.83%
  10. Riverbed Technology, Inc. (RVBD): 3.62%

SOXX (iShares PHLX SOX Semiconductor ETF) tracks the popular PHLX Semiconductor Index. The fund was launched in October 2001. The expense ratio is .48%. AUM equal nearly $268 million and average daily trading volume is 386K shares. As of mid-September 2011 the annual dividend is $.44 and YTD return is -11%.

The logical alternative is SMH (ML Semiconductor HOLDR) which is much more popular and better traded than SOXX. We choose to focus on ETFs when possible but can't ignore the consistently overall better trading behavior for SMH which is widely followed by active traders. AUM equal $541M and average daily trading volume is over 12M shares. With the likely conversion of SMH to an ETF managed by Van Eck the AUM is falling sharply. We'll have to wait and see how this situation evolves  

Data as of September 2011

SOXX Top Ten Holdings & Weightings

  1. Broadcom Corporation (BRCM): 9.48%
  2. Intel Corp (INTC): 9.05%
  3. Applied Materials, Inc. (AMAT): 8.22%
  4. Texas Instruments, Inc. (TXN): 7.51%
  5. Altera Corp. (ALTR): 6.46%
  6. Avago Technologies Ltd (AVGO): 4.96%
  7. Taiwan Semiconductor Manufacturing ADR (TSM): 4.43%
  8. Xilinx Inc (XLNX): 4.41%
  9. Linear Technology (LLTC): 4.19%
  10. Marvell Technology Group, Ltd. (MRVL): 4.10

Data as of September 2011

SMH Top Ten Holdings & Weightings

  1. Intel Corp (INTC): 20.74%
  2. Texas Instruments, Inc. (TXN): 20.40%
  3. Applied Materials, Inc. (AMAT): 9.95%
  4. Altera Corp. (ALTR): 7.70%
  5. Analog Devices Inc (ADI): 6.41%
  6. Xilinx Inc (XLNX): 4.97%
  7. National Semiconductor (NSM): 4.66%
  8. Linear Technology (LLTC): 4.57%
  9. KLA-Tencor Corporation (KLAC): 3.72%
  10. Broadcom Corporation (BRCM): 3.44%

FXL (First Trust Technology AlphaDEX ETF) follows the StrataQuant Technology Index which focuses on those select technology stocks in the Russell 1000 Index. From this First Trust employs an enhanced strategy to select and alter the index. The fund was launched in May 2007. The expense ratio is .70%. AUM equal $140 million and average daily trading volume is 140K shares. As of July 2011 the dividend has been negligible but the YTD return has been -15%.

Data as of September 2011

FXL Top Ten Holdings & Weighting

  1. SanDisk Corp (SNDK): 2.17%
  2. Intel Corp (INTC): 2.13%
  3. Marvell Technology Group, Ltd. (MRVL): 2.12%
  4. Varian Semiconductor Equipment Associates, Inc. (VSEA): 2.09%
  5. Micron Technology, Inc. (MU): 2.08%
  6. Hewlett-Packard Co (HPQ): 2.04%
  7. Western Digital Corporation (WDC): 2.00%
  8. Computer Sciences Corporation (CSC): 1.97%
  9. International Rectifier (IRF): 1.94%
  10. Vishay Intertechnology, Inc. (VSH): 1.94%

PTF (PowerShares Dynamic Technology ETF) follows the Dynamic Technology Sector Intellidex Index which is another "enhanced" index modified by quantitative methodologies. The fund was launched in October 2006. The expense ratio is .60%. AUM equal $25 million making and average daily trading volume is 13K shares. As of mid-September 2011 the dividend has been negligible and YTD return is -13%.

Data as of September 2011

PTF Top Ten Holdings & Weightings

  1. International Business Machines Corp (IBM): 2.93%
  2. eBay Inc (EBAY): 2.87%
  3. MasterCard Incorporated A (MA): 2.86%
  4. Accenture PLC (ACN): 2.80%
  5. Dell Inc (DELL): 2.77%
  6. KLA-Tencor Corporation (KLAC): 2.57%
  7. The Western Union Company (WU): 2.56%
  8. Fiserv, Inc. (FISV): 2.56%
  9. Rackspace Hosting, Inc. (RAX): 2.47%
  10. Lam Research Corporation (LRCX): 2.39%

 

Technology and innovations in the sector remain a primary focus for investors. Clearly this sector will remain the leading source of innovation and economic growth in the U.S. and globally as well. As the sector expands overseas we'll no doubt offer a review for these issues in another profile.

Investors should note that in a rising market particularly ETFs linked to enhanced issues will tend to outperform conventional index linked issues. I've not done enough analysis to determine their relative strength during down market periods.

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

As stated with other sectors, remember ETF sponsors must issue and their interests aren't aligned with yours. They have a business interest and wish to have a competitive presence in any popular sector.

For further information about portfolio structures using technical indicators like DeMark and other indicators see www.etfdigest.com. You may follow us on Facebook as well and join our group conversations.

You may address any feedback to: feedback@etfdigest.com  

The ETF Digest has a long position in VGT in lazy hedged portfolio.

(Source for data is from ETF sponsors and various ETF data providers.)

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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