Investors witnessed the rise in benchmark 10-year Treasury yields on Jan 3 at a pace considered fastest during a new year in the last two decades. The brunt of the rising 10-year yield was borne by the tech-heavy Nasdaq Composite index, which dipped 1.3% on Jan 4 due to weakness in tech stocks.
The reason for this tech market slowdown can essentially be the soaring benchmark 10-year Treasury yields, which went up as high as 1.71% on Jan 4 after standing at 1.51% on Dec 31. Growth sectors like the tech space feel the pain of rising bond yields as the same decreases the relative value of future earnings, making the popular stocks seem overvalued. Tech companies also face hurdles in funding their growth and buying back stocks due to higher rates (per a CNBC article).
Investors willing to be part of the rebounding tech rally can bet on some top-ranked technology ETFs like Vanguard Information Technology ETF (VGT), The Technology Select Sector SPDR Fund (XLK), iShares U.S. Technology ETF (IYW) and First Trust NASDAQ-100-Technology Sector Index Fund (QTEC).
Technology played a major role in the ongoing health crisis. Telemedicine and Digital Health are receiving significant importance. Data management and storage became integral aspects of healthcare in the present era. Thus, with the technological advancements in the healthcare sector and the rising adoption of healthcare IT solutions as well as advantages of cloud usage healthcare, the cloud computing market is on a growth trajectory.
The work-from-home model bumped up sales of PCs, laptops and other kinds of computer peripherals. According to the latest Canalys report, worldwide PC sales climbed 5% in the third quarter of 2021 from the previous quarter’s level. Total shipments of desktops and notebooks, including workstations, also came in at 84.1 million units during this period.
Certain other ‘new normal’ trends also emerged amid the prevalent pandemic like work from home, increasing digital payments, growing video streaming and soaring video-game sales.
The pandemic has been a blessing in disguise for the e-commerce industry to date as people continue to practice social distancing and shopping online for all essentials, especially food items. Thus, on par with the digitization trend, the upcoming U.S. holiday season is expected to see a significant surge in online sales.
Video-gaming lovers in the United States spent generously in October again. The industry continues to gain amid the health crisis. For 10 months, the total consumer spending on gaming was up 12% year over year to $46.67 billion (per The NPD Group data).
The semiconductor industry increasingly gained investors' attention, backed by its bright prospects. The coronavirus-induced work-from-home and web-based learning trends spurred demand for chips from PC manufacturers and data-center operators.
Technology ETFs to Keep Track of
All the factors discussed above highlight the instrumental role that technology plays amid the ongoing COVID-19 uncertainty in aiding people to maintain safe-distancing norms. Thus, investors could consider the following ETFs:
Vanguard Information Technology ETF VGT
Vanguard Information Technology ETF seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index. VGT has an AUM of $56.46 billion. It charges investors 10 basis points (bps) as annual fees. VGT currently sports a Zacks ETF Rank #1 (Strong Buy), with a Medium-risk outlook (read: Apple Hits $3T Market Cap for The First Time: ETFs to Buy).
The Technology Select Sector SPDR Fund XLK
The Technology Select Sector SPDR Fund seeks to provide investment results that before expenses generally correspond with the price and yield performance of the Technology Select Sector Index. XLK has an AUM of $51.97 billion. It charges investors 12 bps of annual fees. XLK presently flaunts a Zacks ETF Rank of 1, with a Medium-risk outlook (read: 7 ETF Predictions for 2022).
iShares U.S. Technology ETF IYW
iShares U.S. Technology ETF seeks to provide investment results that before expenses generally correspond with the price and yield performance of the Russell 1000 Technology RIC 22.5/45 Capped Index. IYW has an AUM of $10.18 billion. IYW charges investors 41 bps in annual fees, as stated in the prospectus. IYW currently sports a Zacks ETF Rank #1, with a Medium-risk outlook.
First Trust NASDAQ-100-Technology Sector Index Fund QTEC
First Trust NASDAQ-100-Technology Sector Index Fund seeks to replicate as closely as possible, before fees and expenses, the price and yield of the NASDAQ-100 Technology Sector Index. QTEC has an AUM of $4.05 billion. It charges investors 57 bps as annual fees. QTEC also flaunts a Zacks ETF Rank #1 at present, with a High-risk outlook.
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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
First Trust NASDAQ100Technology Sector ETF (QTEC): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
