4 Tech ETFs Poised to Make New Highs as the Market Rally Resumes

NYSE: VGT | Vanguard Information Tech ETF News, Ratings, and Charts

VGT – While potential interest rate hikes next year could mar the tech industry’s growth, the continued digital transformation makes the industry’s long-term prospects bright. So, investors looking to capitalize on the industry’s growth in a relatively less risky way could bet on popular Tech ETFs such as the Vanguard Information Technology Index Fund ETF Shares (VGT), First Trust Dow Jones Internet Index Fund (FDN), Global X Cloud Computing ETF (CLOU), and Innovator ETFs Trust – Innovator IBD 50 ETF (FFTY).

The tech-heavy Nasdaq Composite fell 0.2% to finish at 14,512.44 on September 29, after witnessing its worst day since March, amid a spike in bond yields. However, the composite is still up 14.2% year-to-date. In addition, Nasdaq futures saw 0.3% percentage gains this morning as rising bond yields took a pause. Also, major stocks are expected to receive a boost as Senate Majority Leader Chuck Schumer said that the chamber had reached a deal to avoid a government shutdown this week.

Though the Federal Reserve’s intention to raise the benchmark interest rates next year could mar the tech industry’s growth, the industry is well-positioned for solid long-term growth as businesses aggressively adopt advanced technologies to stay ahead of the race in this digital era.

While it is challenging to select the best stock in the crowded tech space considering the possibility of a sell-off in the near term, investors looking to capitalize on the industry’s growth in a less risky way could bet on quality ETFs exposed to tech stocks. To that end, Vanguard Information Technology Index Fund ETF Shares (VGT), First Trust Dow Jones Internet Index Fund (FDN), Global X Cloud Computing ETF (CLOU), and Innovator ETFs Trust – Innovator IBD 50 ETF (FFTY) could be solid bets now.

Vanguard Information Technology Index Fund ETF Shares (VGT)

VGT is an exchange-traded fund launched and managed by The Vanguard Group, Inc. The fund invests in companies operating across information technology sectors. It seeks to track the performance of the MSCI US Investable Market Index (IMI)/Information Technology 25/50 by using the full replication technique.

With $50.35 billion in AUM, VGT’s top holding is Apple Inc. (AAPL), which has a 19.98% weighting in the fund, followed by Microsoft Corporation (MSFT) at 17.03% and NVIDIA Corporation (NVDA) at 4.40%. It has an expense ratio of 0.10%, lower than the category average of 0.54%.

VGT pays an annual dividend of $2.79, which yields 0.69% on the prevailing price. The ETF’s average four-year dividend yield stands at 1%. VIG has gained 30.5% over the past year and 14.3% over the past nine months.

VGT’s POWR Ratings are consistent with its growth outlook. It has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. It has an A grade for Trade and Buy & Hold, and a B grade for Peer. Get all of VGT’s grades here.

VGT is ranked #1 out of 117 ETFs in the B-rated Technology Equities ETFs group.

First Trust Dow Jones Internet Index Fund (FDN)

Launched and managed by First Trust Advisors L.P., FDN invests in companies operating across information technology, software and services, IT services, internet services, and infrastructure sectors. It uses the full replication technique to track the Dow Jones Internet Composite Index performance.

Amazon.com, Inc. (AMZN) has a 9.39% weighting in the fund as its top holding, followed by Facebook, Inc. Class A (FB) at 7.13%, and Alphabet Inc. Class A (GOOGL) at 5.08%. The fund has $10.96 billion in AUM.

Over the past year, the fund has gained 25.1%. In addition, it has gained 10.8% year-to-date.

It’s no surprise that FDN has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. It has an A grade for Trade and Buy & Hold.

Click here to access FDN’s Peer grade as well. FDN is ranked #3 in the Technology Equities ETFs group.

Global X Cloud Computing ETF (CLOU)

Managed and launched by Global X Management Company LLC., CLOU invests in companies operating across computing software-as-a-service, platform-as-a-service, infrastructure-as-a-service, managed server storage space, and data center real estate investment trusts. It seeks to track the Indxx Global Cloud Computing Index’s performance by using the full replication technique.

CLOU has $1.38 billion in AUM. Its top holdings include Paylocity Holding Corp. (PCTY) with a 5.86% weighting in the fund, Zscaler, Inc. (ZS) at 5.58%, and Paycom Software, Inc. (PAYC) with 5.31%.

Its average four-year dividend yield stands at 0.02%. The fund has gained 22.3% over the past year and generated a 15.7% return over the past six months.

CLOU’s strong fundamentals are reflected in its POWR Ratings. It has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. It also has an A grade for Trade and Peer, and a B grade for Buy & Hold.

CLOU is ranked #17 in the Technology Equities ETFs group. In addition to this, one can access all of CLOU’s grades here.

Innovator ETFs Trust – Innovator IBD 50 ETF (FFTY)

FFTY is an exchange-traded fund managed and launched by Innovator Capital Management, LLC. In addition, it is co-managed by Penserra Capital Management, LLC. The fund invests in companies operating across diversified sectors. It seeks to track the performance of the IBD 50 Index by using the full replication technique.

The fund’s top holdings include Atkore Inc (ATKR) with a 3.94% weighting, InMode Ltd. (INMD) at 3.83%, and Upstart Holdings, Inc. (UPST) with 3.63%. It has $279.50 million in AU.

FFTY’s average four-year dividend yield stands at 0.03%. The ETF has gained 28.2% over the past year and 17.3% over the past nine months.

FFTY’s POWR Ratings reflect its solid prospects. It has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. It has an A grade for Trade and Peer, and a B grade for Buy & Hold.

Click here to see all of FFTY’s ratings. FFTY is ranked #24 out of 58 ETFs in the A-rated Large Cap Growth ETFs group.


VGT shares were trading at $403.49 per share on Thursday morning, down $0.04 (-0.01%). Year-to-date, VGT has gained 14.42%, versus a 16.71% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...


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