By Michael Johnston, founder of
ETF Plays on TechnologyFor investors looking to make a play on technology, there are dozens of ETF options, ranging from broad-based sector funds to more targeted niche ETFs. Here a few.
- SPDR Technology Select Sector Fund (XLK): This broad-based technology fund includes both consumer products companies like Apple (8.5% weighting) and more traditional business-to-business companies like Cisco (6.4%). XLK is up more than 40% on the year, although it has pulled back slightly in recent sessions.
- HOLDRS Merrill Lynch Semiconductor (SMH): This ETF includes several of the companies downgraded by Merrill, meaning it will likely tumble on Thursday. But if the revised forecast for growth proves overly pessimistic, the slip in share price of SMH could create some buying opportunities. Other semiconductor-specific ETFs include iShares Goldman Sachs Semiconductors Index Fund (IGW), SPDR S&P Semiconductors ETF (XSD), and PowerShares Dynamic Semiconductors (PSI).
- ProShares UltraShort Technology (REW): For investors who think the technology sector is headed for a downward correction, REW offers a way to gain inverse leveraged exposure to the sector. It should be noted that REW focuses on delivering daily returns of the Dow Jones U.S. Technology Index, so it requires regular monitoring.