Tech ETFs offer attractive investment opportunities now due to their broad exposure to the booming AI and cloud computing sectors, capturing the sector’s growth while diversifying risk across multiple tech companies. They provide liquidity, cost efficiency, and the potential for substantial gains as the tech industry continues to expand.
Therefore, investors might consider strong tech ETFs, such as iShares Expanded Tech Sector ETF (IGM), Fidelity MSCI Information Technology Index ETF (FTEC), and Vanguard Information Technology Index Fund ETF Shares (VGT).
AI and cloud integration are revolutionizing industries by driving innovation and efficiency. SMOs and governments in developing nations are increasingly adopting cloud computing, enabling access to AI without costly infrastructure investments. This shift creates diverse investment opportunities. The global cloud AI market is projected to surge to $301.20 billion by 2028, with a 38.4% CAGR.
Furthermore, amid innovations like AI, 5G, and big data, tech ETFs stand out as a compelling investment due to their balance of growth potential and risk management. With tech giants demonstrating resilience and anticipated Fed rate cuts on the horizon, the sector is well-positioned for further gains, offering diversified exposure and the potential for significant returns.
Given this favorable backdrop, let’s evaluate the three Technology Equities ETFs picks, starting with number three.
ETF #3: iShares Expanded Tech Sector ETF (IGM)
IGM is an exchange-traded fund launched by BlackRock, Inc. The fund is managed by BlackRock Fund Advisors. It invests in public equity markets in the United States and Canada. The fund invests in stocks across sectors such as consumer discretionary, IT, software, internet services, technology hardware, communications, and semiconductors. The fund invests in growth and value stocks of companies across diversified market capitalizations. It seeks to track the performance of the S&P North American Expanded Technology Sector Index by using a representative sampling technique.
With $5.06 billion in assets under management (AUM), IGM’s top holding is Apple Inc. (AAPL) with a 9.05% weighting, followed by Meta Platforms, Inc. (META), with an 8.75% weighting, and NVIDIA Corporation (NVDA), with 8.41%. It has a total of 282 holdings.
It has an expense ratio of 0.41%, lower than the category average of 0.58%. It currently has a NAV of $93.32. IGM’s fund inflows came in at $483.46 million over the past year.
The fund’s annual dividend of $0.19 yields 0.21% on the current share price. Its four-year average yield is 0.34%. Moreover, its dividend payouts have increased at a CAGR of 13.7% over the past three years and 1.2% over the past five years.
IGM has gained 43% over the past year and 32.8% over the past nine months to close the last trading session at $93.55.
IGM’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
IGM has an A grade for Buy & Hold and Trade. Of the 119 ETFs in the B-rated Technology Equities ETFs group, it is ranked #9. Click here to access all of IGM’s POWR Ratings.
ETF #2: Fidelity MSCI Information Technology Index ETF (FTEC)
FTEC is an exchange-traded fund launched and managed by Fidelity Management & Research Company LLC. It is co-managed by BlackRock Fund Advisors. The fund invests in the public equity markets of the United States, focusing on companies in the information technology sector. It includes growth and value stocks across diverse market capitalizations and seeks to track the performance of the MSCI USA IMI Information Technology 25/50 Index using a representative sampling technique.
With $11.75 billion in AUM, the fund has a total of 294 holdings. FTEC’s top holding is AAPL with a 17.37% weighting, followed by Microsoft Corporation (MSFT) with a 15.44% weighting, and NVDA with 15.26%.
FTEC has an expense ratio of 0.08%, lower than the category average of 0.58%. It currently has a NAV of $171.52. Its fund inflows came in at $2.06 billion over the past year.
The ETF pays an annual dividend of $1.12, which yields 0.66% on the current price. It has a four-year average dividend yield of 0.76%. Its dividend payouts have increased at a CAGR of 12.7% over the past three years and 9.8% over the past five years.
FTEC has gained 25.2% over the past nine months and 34.9% over the past year to close the last trading session at $171.60.
FTEC’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold and Trade. It is ranked #2 in the same group. To access all the POWR Ratings for FTEC, click here.
ETF #1: Vanguard Information Technology Index Fund ETF Shares (VGT)
VGT is an exchange-traded fund launched and managed by The Vanguard Group, Inc. The fund invests in the public equity markets of the United States, focusing on companies in the information technology sector. It includes growth and value stocks across diverse market capitalizations and seeks to track the performance of the MSCI US Investable Market Index (IMI)/Information Technology 25/50 using a full replication technique.
With $75.47 billion in assets under management (AUM), VGT’s top holding is AAPL with a 17.22% weighting, followed by MSFT with a 15.84% weighting, and NVDA with 14.07%. VGT has a total of 320 holdings.
VGT has an expense ratio of 0.10%, lower than the category average of 0.58%. It currently has a NAV of $576.99. Its fund inflows came in at $3.52 billion over the past six months.
The ETF pays an annual dividend of $3.70, which yields 0.65% on the current price. It has a four-year average dividend yield of 0.75%. VGT’s dividend payouts have increased at a CAGR of 12.3% over the past three years and 7.9% over the past five years.
VGT has gained 33.9% over the past year and 25.2% over the past nine months to close the last trading session at $576.35.
VGT’s POWR Ratings reflect its promising prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
VGT has an A grade for Buy & Hold and Trade. In the Technology Equities ETFs group, it is ranked first. Click here to access all of VGT’s POWR Ratings.
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VGT shares were trading at $576.19 per share on Thursday afternoon, up $6.60 (+1.16%). Year-to-date, VGT has gained 19.49%, versus a 19.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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