Cinthia Murphy, Managing Editor, ETF.com
The U.S. technology sector has delivered quite a performance in 2019, rallying more than 40% this year when the S&P 500 itself tacked on gains of about 25%.
The tech sector is now on pace to register its best returns in a decade, and third best ever. The best performing tech ETFs of the year show that just about every pocket of the technology segment has done well, particularly semiconductors and information technology names.
The Technology Select Sector SPDR Fund (XLK) is among the year’s top-performing tech ETFs, and it has gathered more than $1 billion in fresh net assets in 2019. This fund has $25 billion in total assets under management today, making it the biggest tech ETF on the market. It costs 0.13% in expense ratio, or $13 per $10,000 invested.
XLK is a concentrated fund, investing in about 70 tech names found in the S&P 500. Because the portfolio is market-cap-weighted, XLK tilts large, and allocates heavily to a handful of companies. In fact, nearly 40% of XLK is in only two companies: Apple and Microsoft.
That type of heavy concentration can sometimes be detrimental to returns, because only two names are driving a large part of overall results. But as ETF.com’s ETF analyst Sumit Roy notes, in 2019, “Size hasn’t been a deterrent to lofty returns.” That’s because Apple and Microsoft are, respectively, up 72% and 51% this year, pushing XLK sharply higher.
Leading top performers, however, isn’t XLK; instead, it’s a group of semiconductor-focused strategies, including the VanEck Vectors Semiconductor ETF (SMH), the SPDR S&P Semiconductor ETF (XSD), the iShares PHLX Semiconductor ETF (SOXX) and the First Trust Nasdaq Semiconductor ETF (FTXL), each with total returns exceeding 50% year to date.
Here are the 10 best performing tech ETFs of 2019, excluding leveraged and inverse strategies:
Data measures total returns for the year-to-date period through Nov. 29.
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