How ETF Traders Are Profiting on the Latest Tech Boom

Joel Anderson |

Google (GOOG) passed $1,000 a share Friday after its Q3 earnings report was released on Thursday after market close, pushing it into the third spot in the world for total market capitalization. This means, along with Apple  (AAPL) and Microsoft (MSFT) , three of the top four most valuable companies in the world are coming out of the tech sector. And this is a trend that many predict will continue, with computer usage and connectivity continuing to rise around the globe.

For those investors interested in jumping on this trend without having to risk hand-picking a basket of tech companies, there are several popular options for tech sector ETFs that will allow for a lower-risk, broader-based bet on the industry as a whole. Here’s a look at the three highest-volume ETFs tracking technology equities.



Technology Select Sector SPDR Fund ($XLK)

Using the S&P Technology Select Sector Index as its benchmark, the SPDR tech ETF is the industry standard with average trading volume clearing 6 million shares a day. The fund’s primary holdings are Apple (14.57 percent of portfolio), Google (8.91 percent), and Microsoft (8.35 percent). The ETF has more than doubled in value over the last five years, and it provides a quarterly dividend of $0.16 a share (a 1.81 percent yield).

Market Vectors Semiconductor ETF ($SMH)

The second-most popular tech ETF drills a little deeper into the sector with an industry-specific offering. Tracking the Market Vectors US-Listed Semiconductor 25 Index, the ETF is up over 35 percent in value in 2013 alone and offers a dividend yield of 1.82 percent ($0.01 a share). The three biggest holding in the ETF are Intel (INTC) at 18.69 percent of its holdings, Taiwan Semiconductor Manufacturing Company Ltd. ($TSM) at 14.62 percent, and Texas Instruments (TXN) at 7.05 percent.

iShares Dow Jones US Technology Sector Index Fund ($IYW)

The iShares fund follows the Dow Jones U.S. Technology Index, and, like the SPDR option, its biggest holdings are Apple, Google, and Microsoft at 16.83 percent, 10.3 percent, and 9.65 percent of its holdings respectively. Its dividend is lower than the other two options, with a yield of just 1.15 percent, but the ETF has also more than doubled in value over the last half a decade.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 140.64 -0.28 -0.20 22,395,563 Trade
GOOG Alphabet Inc. 814.43 -3.15 -0.39 1,981,006 Trade
MSFT Microsoft Corporation 64.98 0.11 0.17 22,617,105 Trade
NUFMF Nufarm Ltd 7.10 0.00 0.00 0

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