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Top 10 Technology ETFs

#5: First Trust Internet ETF (FDN)

FDN follows the Dow Jones Internet Index which demands a constituent company must have 50% of its revenues from the internet. It was launched in June 2006. The expense ratio is .60%. AUM equal $509M and average daily trading volume is 253K shares. In our opinion this ETF provides the greatest exposure to companies in this important sector.

As of early February 2012 annual dividend yield was .07% and YTD return 5.54%. The one year return was -2.85%.

Data as of First Quarter 2012

FDN Top Ten Holdings & Weightings

  1. Google, Inc. (GOOG): 11.02%
  2. Amazon.com Inc (AMZN): 7.02%
  3. eBay Inc (EBAY): 5.78%
  4. Yahoo! Inc (YHOO): 4.94%
  5. Priceline.com, Inc. (PCLN): 4.88%
  6. Salesforce.com, Inc. (CRM): 4.08%
  7. Juniper Networks, Inc. (JNPR): 4.04%
  8. Check Point Software Technologies, Ltd. (CHKP): 3.60%
  9. Akamai Technologies, Inc. (AKAM): 3.35%
  10. TIBCO Software, Inc. (TIBX): 3.11%

#4: First Trust NASDAQ 100 Technology ETF (QTEC)

QTEC follows the NASDAQ 100 Technology Sector Index is an equally weighted index. The fund was launched in April 2006. The expense ratio is .60%. AUM equal $165 million while average daily trading volume is 60K shares. As of early February 2012 annual dividend yield was .33% and YTD return 11.90%. The one year return was -.79%.

Most investors believe the logical alternative to QTEC is QQQ (PowerShares NASDAQ 100 ETF). It follows the NASDAQ 100 Index which includes the largest 100 nonfinancial companies listed on the NASDAQ. But it's not a pure technology play with nearly 30% of constituents in other sectors.

Data as of First Quarter 2012

QTEC Top Ten Holdings & Weightings

  1. Seagate Technology PLC (STX): 3.35%
  2. F5 Networks, Inc. (FFIV): 3.18%
  3. Akamai Technologies, Inc. (AKAM): 2.99%
  4. Citrix Systems, Inc. (CTXS): 2.88%
  5. KLA-Tencor Corporation (KLAC): 2.76%
  6. VeriSign, Inc. (VRSN): 2.72%
  7. Autodesk, Inc. (ADSK): 2.72%
  8. SanDisk Corp (SNDK): 2.71%
  9. Intel Corp (INTC): 2.67%
  10. Cisco Systems Inc (CSCO): 2.64%

#3: iShares Dow Jones U.S. Technology ETF (IYW)

IYW follows the index of the same name. The fund was launched May 2000. The expense ratio is .48%. AUM equal $1.3 billion and average daily trading volume is 256K shares. As of early February 2012 annual dividend yield was .61% and YTD return 9.44%. The one year return was 3.31%.

Alternative choices with similar characteristics include MTK (SPDR MS Technology ETF) which follows the Morgan Stanley Technology Index. The expense ratio is .50%.  IGM (iShares S&P/GSTI Technology ETF) follows the index of the same name. The expense ratio is .48%. Both ETFs have achieved similar rates of return with similar holdings. 

Data as of First Quarter 2012

IYW Top Ten Holdings & Weightings

  1. Apple, Inc. (AAPL): 17.31%
  2. International Business Machines Corp (IBM): 10.14%
  3. Microsoft Corporation (MSFT): 8.96%
  4. Google, Inc. (GOOG): 7.57%
  5. Intel Corp (INTC): 5.80%
  6. Cisco Systems Inc (CSCO): 4.59%
  7. Qualcomm, Inc. (QCOM): 4.31%
  8. Oracle Corporation (ORCL): 4.01%
  9. Hewlett-Packard Co (HPQ): 2.41%
  10. EMC Corporation (EMC): 2.09%

#2: Vanguard Information Technology ETF (VGT)

VGT follows the MSCI US Investable Market Information Technology 25/50 Index. The index consists of small to large companies in the broad technology space including various sectors and subsectors. The fund was launched January 2004.

The expense ratio is .19%. AUM equal $2 billion with average daily trading volume 215K shares. As of early February 2012 annual dividend yield was .79% and YTD return 9.19%. The one year return was 3.63%.

Data as of First Quarter 2012

VGT Top Ten Holdings & Weightings

  1. Apple, Inc. (AAPL): 14.75%
  2. International Business Machines Corp (IBM): 8.87%
  3. Microsoft Corporation (MSFT): 7.90%
  4. Google, Inc. (GOOG): 5.44%
  5. Oracle Corporation (ORCL): 4.87%
  6. Intel Corp (INTC): 4.73%
  7. Cisco Systems Inc (CSCO): 3.56%
  8. Qualcomm, Inc. (QCOM): 3.40%
  9. Hewlett-Packard Co (HPQ): 2.03%
  10. Visa, Inc. (V): 1.88%

#1: SPDR Technology Sector ETF (XLK)

XLK follows the Technology Select Sector Index which breaks the S&P 500 to those companies involved in technology and relevant subsectors. The fund was launched December 1998. The expense ratio is .19%. AUM (Assets under Management) equal $8.2 billion while average daily trading volume is over 7.5M shares. As of early February 2012 annual dividend yield was 1.51% and YTD return 7.27%. The one year return was 4.90%.

ProShares and Direxion offer leveraged issues for hedging and/or speculation.

Data as of First Quarter 2012

XLK Top Ten Holdings & Weightings

  1. Apple, Inc. (AAPL): 14.80%
  2. International Business Machines Corp (IBM): 8.52%
  3. Microsoft Corporation (MSFT): 7.64%
  4. AT&T Inc (T): 7.05%
  5. Google, Inc. (GOOG): 6.42%
  6. Verizon Communications Inc (VZ): 4.49%
  7. Intel Corp (INTC): 4.14%
  8. Oracle Corporation (ORCL): 3.99%
  9. Cisco Systems Inc (CSCO): 3.82%
  10. Qualcomm, Inc. (QCOM): 3.64%

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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