During the bull run of the past decade, technology stocks have led Wall Street higher. While they were among the stocks that initially fell during the COVID-19 selloff in February and March, most tech stocks have had notable comebacks since they hit a 52-week low in late March.
So it's no surprise that there are dozens of technology exchange-traded funds (ETFs) in the US, excluding leveraged ETFs or inverse ETFs. Below, we'll take a closer look at where the tech sector is headed and consider two funds for investments in robotics, artificial intelligence (AI) and autonomous technology.
Next Generation Tech Influencers
The technology sector includes many fast-growing companies. A large number of shares with which investors are known worldwide are listed on the stock exchange. The index tracks the 100 largest non-financial stocks listed on the NASDAQ stock exchange.
The index includes tech giants such as Adobe (NASDAQ :), Google parent company Alphabet (NASDAQ :), (NASDAQ :), Amazon (NASDAQ :), Apple (NASDAQ: ), Facebook (NASDAQ :), Intel (NASDAQ 🙂 and Microsoft (NASDAQ :)) among others. Especially in the past decade, these companies have had a substantial impact on our lives and have become household names.
But there are also new and more established companies in emerging areas such as AI, robotics and big data. In this decade, "intelligent" machines are likely to become a growing part of personal and professional life.
Meanwhile, data collection and analysis are playing an increasingly important role in business. The Internet of Things (IoT), 5G and mobile devices are likely to contribute to the transformation of societies worldwide.
With all that in mind, here are two ETFs on our radar:
1. Global X Robotics & Artificial Intelligence ETF
Current price: $ 25.83
52-week range: $ 14.77 – $ 25.98
Dividend yield: 0.25%
Expense Ratio: 0.68% per year, or $ 68 on a $ 10,000 investment
The Global X Robotics & Artificial Intelligence ETF (NASDAQ 🙂 invests in companies that could benefit from greater adoption and use of robotics and AI. Such companies can be those involved in industrial robotics and automation, non-industrial robots and autonomous vehicles. The fund tracks the INDXX Global Robotics & Artificial Intelligence Thematic Index.
BOTZ currently includes 31 companies. The top ten make up about 65% of total net worth, which is close to $ 1.6 billion. BOTZ's five largest companies are ABB (NYSE :), Intuitive Surgical (NASDAQ :), NVIDIA (NASDAQ :), Fanuc (OTC 🙂 and Keyence (OTC :).
The fund, launched in September 2016, also has significant exposure to non-U.S. Markets. Year-to-date (YTD), BOTZ is up about 17%. It reached a record high on July 27. In the case of short-term profit-taking in the fund, long-term investors may consider buying the dips, especially if the price is $ 22.50.
2. ARK Autonomous Technology & Robotics ETF
Current price: $ 53.76
52-week range: $ 26.19 – $ 54.85
Dividend yield: N / A
Expense Ratio: 0.75% per year, or $ 75 on an investment of $ 10,000
The ARK Autonomous Technology & Robotics ETF (NYSE 🙂 consists of companies that can develop, produce or enable autonomous transport, robotics and automation, 3D printing, energy storage and space exploration.
ARKQ currently includes 38 companies. The top ten accounts for about 55% of total net worth, nearly $ 320 million.
The five largest ARKQ companies are Tesla (NASDAQ :), 2U (NASDAQ :), Xilinx, (NASDAQ :), Materialize (NASDAQ 🙂 and Stratasys (NASDAQ) :).
YTD, the fund has risen more than 44%. Like BOTZ, ARKQ also reached record highs earlier in July. However, it is important to note that Tesla's weighting within this ETF is 10.17%. Therefore, daily movements in TSLA shares affect the price of ARKQ.
In the event of a price drop towards the $ 50 or even $ 45 level, long-term investors may find better value in the fund.
Exchange traded funds typically provide cheap, efficient exposure to targeted markets and sectors, such as technology. While areas such as artificial intelligence, robotics and big data are still emerging, those who believe in their potential for disruptive innovation may consider doing further research and investing in these companies and ETFs.