Technology ETFs are the exchange-traded funds that hold assets including the technology stocks. Some tech ETFs own all the stocks that are related to technology, while others have a niche focus by buying only semiconductor stocks or only cybersecurity stocks. Thus, tech ETFs are sector-specific index funds.
Tech ETFs allow investors to get as much exposure as they want as they can be focused on a specific technology, a specific region, or a specific way the ETFs are managed. Some tech ETFs are equally weighed while others are weighted according to market capitalization. Thus, tech ETFs are an excellent means for investors to get exposure to the technology sector, in a less risky manner.
Factors to Consider Before Investing in Tech ETFs
Tech ETFs have been riding the high of the technology sector for the past many years. They have almost always outperformed the S&P 500 index and continue to report double-digit gains in 2019. Tech ETFs allow investors to achieve diversification, exposure to the top technology companies, and excellent growth potential, at low fees.
On the other hand, similar to technology stocks, tech ETFs are also subject to rapid upturns and downturns. Technology is a highly volatile sector, and the same volatility and high beta is an integral part of the tech ETFs as well.
Which Tech ETFs Should I Buy?
There is a wide variety of tech ETFs to be chosen from. To make the selection simpler for you, we have aggregated a list of the tech ETFs. They vary in terms of the specific technology they invest in, diversification, and stability.
Tech ETFs are effective means for relatively new investors to invest in the technology sector. Instead of investing in one specific company and its stock, they can add diversification to their portfolio through tech ETFs. The future of technology is positive yet unpredictable. Therefore, investors must be vigilant and exercise due diligence before choosing the highly rewarding yet highly risky sector.
If you are interested in investing in tech ETFs, you may also enjoy our list of other well performing ETFs.
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