3 Technology ETFs for Exposure to the Tech Sector

NYSE: XT | iShares Exponential Technologies ETF News, Ratings, and Charts

XT – Thanks to increased spending and optimistic analyst sentiments, the tech sector seems well-positioned for robust growth in the upcoming years. Thus, to gain exposure to the tech sector, one could consider investing in quality tech ETFs First Trust Nasdaq Semiconductor (FTXL), Global X Artificial Intelligence & Technology (AIQ), and iShares Exponential Technologies (XT). Read on….

Despite facing challenges such as a dip in global tech spending and rising layoffs over the past year, the tech sector is showing promising signs of recovery. Economists have lowered their recession forecasts, and analysts are optimistic about the potential for modest growth in the tech industry this year.

Given this positive sentiment, investing in technology ETFs like First Trust Nasdaq Semiconductor ETF (FTXL), Global X Artificial Intelligence & Technology ETF (AIQ), and iShares Exponential Technologies ETF (XT) might be wise choices for those looking to gain exposure to the tech sector.

With increased spending on software and IT services, the focus is shifting back to innovation and growth. According to a Deloitte survey of 122 tech executives, 55% rate the tech industry as healthy or very healthy, with 62% expecting this trend to continue over the next six months.

The survey highlighted efficiency, innovation, and productivity as primary focus areas, with Artificial Intelligence (AI), cloud computing, cybersecurity, advanced connectivity, and generative AI driving industry growth.

Moreover, the rising adoption of AI is fueling investments in cloud infrastructure, connectivity, and modernization, indicating an evolving and innovative tech landscape. Nearly two-thirds of tech leaders believe this is an opportune moment for their companies to take greater risks.

Gartner’s research further supports this optimism, predicting an 8% year-over-year increase in global IT spending in 2024, reaching $5.06 trillion. Software and IT services are expected to contribute to about half of this spending surge, driven by significant investments in cybersecurity as AI adoption heightens security concerns.

Exchange-Traded Funds (ETFs) offer a strategic way to invest, providing a diversified portfolio that reduces risk while capturing broad market opportunities. Rather than being tied to the performance of individual stocks, ETFs allow investors to benefit from the collective growth of multiple companies in the tech sector.

Based on a report by The Business Research Company, the global information technology market is estimated to reach $12.42 trillion by 2028, growing at a CAGR of 8.3%.

With that in mind, let’s look at the fundamentals of the top three Technology Equities ETFs, beginning with number 3.

ETF #3: First Trust Nasdaq Semiconductor ETF (FTXL)

FTXL seeks to track the performance of the Nasdaq US Smart Semiconductor Index. Managed by First Trust Advisors LP, the fund invests in companies within the information technology, semiconductors, and semiconductor equipment sectors. It includes a mix of value, growth, and volatile stocks from companies of various market capitalizations.

The fund has $1.49 billion in assets under management (AUM). Its top holdings are NVIDIA Corporation (NVDA), with an 11.17% weighting, QUALCOMM Incorporated (QCOM), at 9.69%, and Applied Materials, Inc. (AMAT), and Broadcom Inc. (AVGO), at 8% and 7.84%, respectively. The fund has a total of 32 holdings.

FTXL has an expense ratio of 0.60%, compared to the category average of 0.58%. Its fund inflows were $15.95 million over the past three months and $72.56 million over the past six months. Also, it has a beta of 1.58, indicating high volatility compared to the broader market.

The fund pays an annual dividend of $0.48, translating to a 0.50% yield at the prevailing price level. Its dividend payouts have grown at a 26.5% CAGR over the past three years. The fund’s four-year average yield is 0.56%.

Over the past year, FTXL has gained 44.5% to close the last trading session at $96.09. It has also gained 8.3% over the past month. The ETF had an NAV of $96.14 as of June 6, 2024.

FTXL’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

FTXL has an A grade for Trade, Buy & Hold, and a B for Peer. Among the 119 ETFs in the B-rated Technology Equities ETFs group, it is ranked #16. To access all of FTXL’s POWR Ratings, click here.

ETF #2: Global X Artificial Intelligence & Technology ETF (AIQ)

AIQ, managed by Global X Management Company LLC, focuses on investing in companies developing and using artificial intelligence technology and those providing hardware for big data analysis. This includes firms in the AI software, system software, and IT sectors. After accounting for fees and expenses, the fund aims to mirror the price and yield performance of the Indxx Artificial Intelligence & Big Data Index.

The fund has a total of 85 holdings. Its top holdings include NVDA with a 5.52% weighting, Tencent Holdings Ltd. at 4%, followed by QCOM and Netflix, Inc. (NFLX) with 3.77% and 3.63% weightings, respectively.

AIQ’s trailing-12-month dividend of $0.05 yields 0.14% on the current price level, while its four-year average dividend yield is 0.34%.

The fund has an expense ratio of 0.68% compared to the category average of 0.37%. Over the past six months, AIQ’s fund inflows came in at $949.38 million, and $1.43 billion over the past year. Also, the ETF has a beta of 1.25.

AIQ has gained 28.3% over the past year and 17.3% over the past six months to close the last trading session at $34.46. As of June 6, 2024, AIQ had an AUM of $1.87 billion and an NAV of $34.36.

AIQ’s POWR Ratings reflect solid prospects. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

AIQ has an A grade for Trade and Buy & Hold. Of the 119 ETFs in the Technology Equities ETFs group, it is ranked #14.

Beyond what we stated above, we have also given AIQ a grade for Peer. Get all AIQ ratings here.

ETF #1: iShares Exponential Technologies ETF (XT)

BlackRock Fund Advisors manages XT. The fund invests globally in public equity markets and targets companies in the information technology sector, including growth and value stocks across various market capitalizations. It seeks to track the performance of the Morningstar Exponential Technologies Index, which measures the performance of equity securities issued by companies that are involved in groundbreaking technologies.

With $3.36 billion in AUM, its top holdings are NVDA with a 1.22% weighting in the fund, followed by First Solar, Inc. (FSLR), Coinbase Global, Inc. (COIN), and Moderna, Inc. (MRNA) at 0.87% weight each, respectively. The ETF has a total of 201 holdings.

The ETF’s expense ratio is 0.46%, higher than the category average of 0.37%. XT fund outflows were $8.73 million over the past five days.

The fund pays an annual dividend of $0.25, which translates to a 0.42% yield at the current price level. Its four-year average yield is 0.80%.

XT has gained 6.3% over the past nine months and 8% over the past year to close the last trading session at $59.19. It has a five-year beta of 1.21. The fund’s NAV was $59.22 as of June 6, 2024.

XT’s solid fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

The fund has an A grade for Trade and Buy & Hold. XT is ranked #11 among 119 ETFs in the same B-rated group. Click here to access all the XT ratings.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >

XT shares were unchanged in premarket trading Friday. Year-to-date, XT has declined -1.14%, versus a 12.84% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
XTGet RatingGet RatingGet Rating
FTXLGet RatingGet RatingGet Rating
AIQGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

Unveiling Adobe (ADBE) Q2 Earnings: What Lies Ahead for Investors?

Software giant Adobe Inc. (ADBE) has released its second-quarter earnings, revealing double-digit growth in both revenue and profits. Yet, concerns arise around the complexities of navigating growth in the face of advancing AI technologies. Let’s analyze ADBE’s recent performance and assess key fundamentals to uncover what lies ahead for investors…

3 AI Stocks to Invest in for the Next Technological Revolution

The AI market is experiencing a significant growth trajectory, driven by widespread application across various industries. Hence, it could be wise to invest in top AI stocks, Alphabet (GOOGL), Meta Platforms (META), and Alibaba Group Holding (BABA) for the next technological revolution. Read more...

Analyzing Broadcom’s (AVGO) Q2 Earnings: Worth Investing?

Driven by a surge in demand for its AI products, Broadcom (AVGO) reported robust earnings in its latest quarterly results, exceeding expectations on both top and bottom lines. However, is the stock’s recent announcement of a 10-for-1 stock split worth investing in? Keep reading to find out…

Stock Alert: Breakout or Fake Out?

The S&P 500 (SPY) officially made new highs this week. Perhaps a reason to celebrate more gains on the way...or perhaps there are signs this move is hollow leading to more downside soon on the way. To help solve this riddle, 44 year investment veteran Steve Reitmeister shares his views along with a trading plan and top picks to stay on the right side of the action. That is what Steve Reitmeister will cover in his latest commentary below. Read on for more...

Read More Stories

More iShares Exponential Technologies ETF (XT) News View All

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