Buy These 3 ETFs to Profit on the Boom in Virtual Reality

: XLC | The Communication Services Select Sector SPDR Fund News, Ratings, and Charts

XLC – The virtual reality (VR) industry is expected to perform pretty well in the upcoming months due to the increasing prevalence of hybrid working and consistent technological advancements. So, investors looking to cash in on the industry’s growth in a relatively less risky manner could invest in VR-stock-focused ETFs such as Communication Services Select Sector SPDR Fund (XLC), VanEck Vectors Semiconductor ETF (SMH), and Global X Robotics & Artificial Intelligence ETF (BOTZ).

The COVID-19 pandemic increased the demand for virtual reality (VR) as restrictions compelled most businesses and schools to operate remotely. VR is believed to be a game-changer as it digitally creates a three-dimensional environment and is the solution to some of the many problems the pandemic brought forward. The VR industry should witness further demand with the resurgence of COVID-19 cases and the increasing adoption in hybrid working environments.

Increasing penetration of advanced technologies and rising investments in cloud-based services are some of the key factors that should drive the growth of the VR market. According to a Grand View Research report, the VR market is expected to grow at a CAGR of 18% between 2021 and 2028.

While it may be risky to bet on a particular VR stock with rising competition in this space, a less risky way to capitalize on the industry’s growth could be betting on VR-focused ETFs. We think prominent VR-focused ETFs Communication Services Select Sector SPDR Fund (XLC), VanEck Vectors Semiconductor ETF (SMH), and Global X Robotics & Artificial Intelligence ETF (BOTZ) could be solid bets now.

Communication Services Select Sector SPDR Fund (XLC)

XLC is an exchange-traded fund launched by State Street Global Advisors, Inc. and managed by SSGA Funds Management, Inc. The fund invests in companies operating across media and entertainment, communication services, telecommunication services, and diversified wireless telecommunication services sectors.

With $15.99 billion in AUM, XLC’s top holding is Facebook, Inc. (FB), with a 23.38% weighting in the fund, followed by Alphabet Inc. Class A (GOOGL) at 13.01% and Alphabet Inc. Class C at 12.41%. It has an expense ratio of 0.12%, lower than the category average of 0.37%.

XLC pays an annual dividend of $0.50, which yields 0.59% on the prevailing price. The ETF’s average four-year dividend yield stands at 0.66%. XLC has gained 41.7% over the past year and 26.6% over the past nine months.

XLC’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. In addition, It has an A grade for Trade and Buy & Hold. Get XLC’s Peer grade here.

XLC is ranked #7 out of 55 ETFs in the Large Cap Growth ETFs group.

VanEck Vectors Semiconductor ETF (SMH)

Launched and managed by Van Eck Associates Corporation, SMH invests in companies operating across information technology, semiconductors, and semiconductor equipment sectors. The fund uses the full replication technique to track the MVIS US Listed Semiconductor 25 Index’s performance.

The fund has $6.07 billion in AUM. Its top holdings include Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), with a 13.96% weighting, NVIDIA Corporation (NVDA) at 10.95%, and ASML Holding NV ADR (ASML) with 6.84%. The fund’s 0.35% expense ratio is lower than the category average of 0.54%.

SMH pays $1.50 annually in dividends to its investors, which yields 0.56%. Its average four-year dividend yield stands at 1.57%. Over the past year, the fund has gained 64.2%. In addition, it has gained 24.4% over the past six months.

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

Click here to access SMH’s Peer grade as well. In addition, SMH is ranked #9 out of 118 ETFs in the Technology Equities ETFs group.

Global X Robotics & Artificial Intelligence ETF (BOTZ)

Managed and launched by Global X Management Company LLC, BOTZ invests in companies operating across the development of robotics and/or artificial intelligence sectors. The fund seeks to track the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index.

BOTZ has $2.79 billion in AUM. Its top holdings include Keyence Corporation with an 8.62% weight, NVDA at 8.59%, and Intuitive Surgical, Inc. (ISRG) at 8.44%. The fund’s 0.68% expense ratio compares to the category average of 0.70%.

The fund pays an annual dividend of $0.06, which yields 0.15% at the prevailing share price. Its average four-year dividend yield stands at 0.59%. The fund has gained 45.1% over the past year and generated a 22.1% return over the past six months.

BOTZ’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, Buy & Hold, and Peer.

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


XLC shares were trading at $84.81 per share on Thursday afternoon, down $0.42 (-0.49%). Year-to-date, XLC has gained 26.13%, versus a 20.89% 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...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
XLCGet RatingGet RatingGet Rating
SMHGet RatingGet RatingGet Rating
BOTZGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) has continued on a bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in this early edition of his 2022 Stock Market Outlook. Read on for full details below...

:  |  News, Ratings, and Charts

How Recent Bearish Sentiment Will Impact the Stock Market

Last week, the S&P 500 (SPY) fell during a short trading week. Multiple factors were weighing on investor sentiment. First was September's history for being a weaker month for stock performance. In addition, the previous week's August payrolls miss seemed to linger on investors' minds due to concerns that the delta variant of COVID was slowing the rebound in the economy. The real estate sector led declines as long-term interest rates increased. Consumer staples and utility stocks performed the best. In terms of market cap, the small-cap Russell 2000 Index underperformed the market after two strong weeks of outperforming the larger benchmarks. Growth stocks also outperformed Value stocks. I’ll discuss this and more below…

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

:  |  News, Ratings, and Charts

3 Growth Stocks You Can Buy at a Reasonable Price

Even with growth stocks falling last week, investors are still pouring money into companies with strong growth potential. When you add in a value component, you get the best of both worlds. That's why investors should consider growth at a reasonable price stocks such as Westlake Chemical Corporation (WLK), ManpowerGroup (MAN), AutoNation, Inc. (AN).

:  |  News, Ratings, and Charts

How to Turn Low Priced Stocks into BIG Winners?

Some investors are into growth stocks...some prefer value stocks while others are into momentum, income, chart patterns, insider trading and more. But one area that most investors agree upon is the great appeal in buying low priced stocks. Like those under $10 given the potential that prices soar and you easily beat the stock market (SPY). Read on to discover our brand new strategy for selecting low priced stocks that has led to a surprising +62.88% average annual return. Get the rest below...

Read More Stories

More The Communication Services Select Sector SPDR Fund (XLC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All XLC News