By The ETF Professor
While most of the good cheer in tech land this year can be attributed in part to the seemingly never ending rise of some company called Apple (GM:APPL), it is hard to argue with the results as the Nasdaq composite was up more than 17% year-to-date at the start of trading Friday.
The index is now above 3,000, a number that has not been seen since the tech bubble burst in 2000.
It is a good news/bad news scenario in some regards. Good news because tech's fortunes are vital to the health of the broader market. Bad news because Apple at almost $550 is off limits to many retail investors (yes, it always has to be about Apple, especially when talking ETFs).
And even though tech stocks and two or three big tech ETFs get plenty of press, there are still a few other ETF options for this sector we think your broker is neglecting to tell you about. We will fix that right now.
iShares MSCI All Country Asia Information Technology Index Fund (AAIT): It has been hard keeping up with all of the new funds iShares has introduced this year and its reasonable to expect a couple are going to fall through the cracks. AAIT is potentially one of them. The month-old ETF has made little progress since inception, but that is a short-term view of things.
While volume has been scant, AAIT has already accumulated over $5.5 million in AUM. The 111-stock ETF has a couple of traits investors should note. First, semiconductor stocks account for a third of the fund's weight. Second, the name may say "All Country," but Japan, Taiwan and South Korea represent about 89% of the fund's country allocation.
First Trust NASDAQ-100-Technology Sector Index Fund (QTEC):The First Trust NASDAQ-100-Technology Sector Index Fund got off to such a good start this year, that for a few weeks, the ETF was actually outperforming Apple.
While that is no longer the case, the ETF is still delivering better returns than several big name tech titans. Not only has QTEC looked a whole better than Amazon (AMZN), but it has outpaced constituents Intel (INTC) and Google (GOOG) as well.
QTEC may not garner many headlines, but the ETF has over $169 million in AUM.
iShares MSCI ACWI ex US Information Technology Sector Index Fund (AXIT): It is OK if you have not heard about the iShares MSCI ACWI ex US Information Technology Sector Index Fund, you are not alone. The ETF is almost two years old, has just around $2.75 million in AUM and does not even average 120 shares per day in volume. Like AAIT, AXIT is heavy on Japan, Taiwan and South Korea (that trio represents almost two-thirds of this fund's weight).
Simply put, if you are in AAIT or another global tech fund, you do not need AXIT and its huge bid/ask spreads. If this was not an iShares ETF, chances are it would be headed to the ETF dumpster.
SPDR S&P International Technology Sector ETF (IPK): The SPDR S&P International Technology Sector ETF has left a little something on the table versus the Nasdaq this year and that might be attributable to its country breakdown.
IPK offers exposure to 19 countries, and - surprise, surprise - Japan and South Korea account for 60% of that. That is not the problem. The problem is scant emerging markets exposure after South Korea and allocations to ten European nations.
However, to IPK's credit, it is has performed solidly this year.
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