In a booming technology sector, four of the five big names — Amazon AMZN, Microsoft MSFT, Apple AAPL and Alphabet GOOGL — surpassed a trillion-dollar market capitalization each for the first time since the COVID-19 pandemic. This is largely thanks to the shift in consumer habits to a purely digital world.
The strong performance indicates strong resilience of the tech sector in one of the worst economic environments that the United States has ever seen. In particular, Amazon has been the star performer with shares rising more than 60% in the year-to-date timeframe on booming demand for e-commerce and cloud computing amid the COVID-19 pandemic. The stock topped $3,000 for the first time ever in the latest trading session (read: Top-Ranked Technology ETFs Soaring to All-Time Highs).
Microsoft shares have jumped more than 33% so far this year on growing demand for its Teams chat and online meeting app, and Xbox gaming services. Apple shares have risen more than 27% year to date. Though the smartphone market has saturated, Apple services revenues, which include revenues from iTunes, Apple Music, iCloud, Apple Pay and Apple Care, have been roaring higher. The iPhone maker is a beneficiary of the “stay-at-home” environment, with more consumers staying at home and downloading apps. Meanwhile, Alphabet was the latest to re-enter the trillion-dollar club.
The solid trend is likely to continue with soaring e-commerce demand and solid long-term outlook. The rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning and 5G technology will continue to drive the sector higher.
Given the bullishness, investors could easily tap the hottest “big four” tech giants under one roof through ETFs. We have highlighted some of them below:
iShares Expanded Tech Sector ETF IGM
This ETF tracks the S&P North American Expanded Technology Sector Index, giving investors exposure to 297 hardware, software, Internet marketing, interactive media, and related companies. The big four collectively accounts for 30.3% share in the basket. The fund has AUM of $2.4 billion and charges 46 bps in annual fees. It trades in a moderate volume of nearly 74,000 shares in hand a day and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. The ETF has gained 21% so far this year.
MicroSectors FANG+ ETN FNGS
This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly-traded growth stocks of next generation technology and tech-enabled companies. It holds big four stocks in equal weights of 10% each in its basket and charges 58 bps in annual fees. The product has accumulated $45.2 million in its asset base and trades in average daily volume of 9,000 shares. It is up 44.7% so far this year (read: 4 Sector ETFs Up More Than 30% in First-Half 2020).
Invesco QQQ QQQ
This ETF provides exposure to 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. The big four accounts for 38.1% share in its basket, charging 20 bps in annual fees. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $118.5 billion and average daily volume of around 52.7 million shares. It has risen 22% in the year-to-date timeframe and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares Evolved U.S. Technology ETF IETC
This is an active ETF, having accumulated $58.2 million in its asset base. It employs data science techniques to provide exposure to 227 technology stocks. The big four technology firms account for 40.7% share in its basket and charge 18 bps in annual fees. IETC trades in a light volume of 34,000 shares and has surged 22% so far this year.
Fidelity Nasdaq Composite Index Tracking Stock ONEQ
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 987 stocks with the big four collectively making up for 32.5% of assets. It has AUM of $2.7 billion and average daily volume of around 76,000 shares. The expense ratio comes in at 0.21%. The product has gained 16.6% in the year-to-date frame and carries a Zacks ETF Rank #2 with a Medium risk outlook (read: Nasdaq is Burning Hot: How to Make the Most of it With ETFs).
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