July has been a mixed bag for technology stocks so far, with most in the red after today’s drawdown in markets. However, tech may be able to benefit from all the noise happening in the market these days. The selloff appears to be driven by a surge in Covid-19 cases, which could put pressure on economic activity, but may allow tech more room to run much like during the throws of the pandemic in 2020. In addition, Treasury Yields in the US have been moving much lower, which is of concern, but as technology stocks are mostly in the growth sector, they may benefit from a lower discount rate as future earnings can be discounted at a better rate. Some may want to use this recent selloff as a good entry point or a place to add to positions, and an excellent way to gain exposure is by adding some of the best ETFs in the sector. Q.ai’s deep learning algorithms have identified several of the top US Tech Smart Beta ETFs based on fund flows over the last 90-days, 30-days, and 7-days. We’ve rated three ETFs as Best, two as Good, and 5 as Caution.
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iShares PHLX Semiconductor ETF (SOXX)
The first Best-rated ETF for this month is the iShares PHLX Semiconductor ETF. This ETF aims to follow and track the overall performance of US based companies involved in semiconductor production and equipment. With a worldwide semiconductor shortage, this is definitely the type of ETF you want to keep your eyes on. The ETF is on the smaller side with $7,030,260,604.50 AUM. The ETF has also seen mixed fund flows, with a 90-day fund flow of -$148,036,125.00, 30-day fund flow of $181,960,135.00, and 1-week fund flow of $133,957,545.00. The iShares PHLX Semiconductor ETF also has a net expense ratio of 0.48% which is certainly on the pricier side.
VanEck Vectors Semiconductor ETF (SMH)
The next ETF that scored Best for the month according to our AI systems is the VanEck Vectors Semiconductor ETF. This ETF aims to follow and track the overall performance of companies involved in semiconductor production and equipment. This ETF is unique compared to other semiconductor-focused ETFs, because their holdings are not limited to exclusively US companies. Based on AUM, it is on the smaller side with $5,506,542,351.64 AUM. It has seen negative fund flows of -$237,105,344.50 over the last 90-days, -$204,523,989.00 over the last 30-days, and -$232,636,574.50 over the last week. Its net expense ratio of 0.35% is relatively middle of the pack compared to other tech ETFs, but pricier than ETFs in different sectors.
Direxion Daily Semiconductors Bull 3x Shares (SOXL)
The Direxion Daily Semiconductors Bull 3x Shares is our final Best-rated ETF. This is a leveraged ETF with exposure to the semiconductor space. The ETF aims to receive 300% or 3X the performance of the PHLX Semiconductor Sector Index. In terms of AUM, the ETF is on the smaller-side with $5,030,636,169.18 AUM. The ETF has also seen negative fund flow, with a 90-day fund flow of -$1,017,299,450.00, 30-day fund flow of -$773,462,500.00, and 1-week fund flow of -$73,519,150.00. The ETF also has a net expense ratio of 1.02% which is the priciest on this list.
Global X Nasdaq 100 Covered Call ETF (QYLD)
The Global X Nasdaq 100 Covered Call ETF is our first of two Good-rated ETF this month. The Global X Nasdaq 100 Covered Call ETF follows a “covered call” or “buy-write” strategy, in which the Fund buys the stocks in the Nasdaq 100 Index and “writes” or “sells” corresponding call options on the same index. The ETF is also on the smaller side with $2,368,270,459.69 AUM. The ETF has seen positive fund flows, with a 90-day fund flow of $1,153,122,700.00, 30-day fund flow of $367,854,400.00, and 1-week fund flow of $88,179,000.00. The ETF also has a net expense ratio of 0.6% which is quite pricey.
SPDR NYSE Technology ETF (XNTK)
The SPDR NYSE Technology ETF is our second ETF rated Good this month. This ETF corresponds generally to the total return performance of the NYSE Technology Index, which is composed of 35 leading US-listed technology-related companies. The ETF is smaller-sized with $697,090,120.09 AUM. It has seen negative fund flows over the last 90 days of -$14,428,883.90 and has a net expense ratio of 0.35%.
Invesco QQQ Trust (QQQ)
The Invesco QQQ Trust comes in as our first Caution-scored ETF for the month. This ETF is considered to be the benchmark ETF that tracks the NASDAQ index. With $164,136,811,474.50 AUM, it is by far the largest tech ETF in terms of AUM on our list. It has seen positive fund flows, with a 90-day fund flow of $3,896,162,401.00, 30-day fund flow of $7,546,925,738.00, and 1-week fund flow of $714,954,769.00. It also has a fairly cheap net expense ratio of 0.2% compared to other tech ETFs.
Technology Select Sector SPDR Fund (XLK)
The second Caution-rated ETF is the Technology Select Sector SPDR Fund. This ETF seeks to track the performance of the technology and telecom sector of the S&P 500. It has $40,972,013,917.74 AUM and is medium-sized. It has also seen mixed but mostly negative fund flows, with a 90-day fund flow of -$515,349,511.65, a 30-day fund flow of $240,012,954.45, and a 1-week fund flow of -$83,092,354.95. Its net expense ratio of .13% is also considerably cheaper than other tech ETFs.
First Trust Dow Jones Internet Index Fund (FDN)
The next Caution-rated ETF is the First Trust Dow Jones Internet Index Fund. This ETF seeks investment results that correspond generally to the price and yield, before the Fund’s fees and expenses, of an equity index called the Dow Jones Internet Composite Index. It is medium-sized with $10,384,120,963.06 AUM. The ETF has seen mixed fund flows, with a 90-day fund flow of -$173,566,500.00, a 30-day fund flow of $14,335,500.00, and a 1-week fund flow of -$87,038,500.00. With a net expense ratio of 0.53%, this is one of the more expensive ETFs on the list.
ProShares UltraPro QQQ (TQQQ)
The ProShares UltraPro QQQ is next up on our Caution-rated ETFs this month. The ProShares UltraPro QQQ seeks daily investment results, before fees and expenses, that correspond to three times (3x) the daily performance of the Nasdaq-100 Index. It is medium-sized with $12,160,920,760.00 AUM. The ETF has seen exclusively negative fund flows, with a 90-day fund flow of -$2,315,306,660.00, a 30-day fund flow of -$1,316,018,525.00, and a 1-week fund flow of $147,176,090.00. With a net expense ratio of 0.95%, it is on the pricier side.
iShares US Technology ETF (IYW)
The iShares US Technology ETF is our last ETF rated Caution this month. This ETF aims to give investors exposure to an index of US-based tech stocks focused on electronics, computer software and hardware, and informational technology. Its Top 5 holdings are Apple, Microsoft, Facebook, Nvidia, and Alphabet. The fund is on the smaller side and reports $7,325,261,481.40 AUM. The ETF has seen mixed fund flows, with a 90-day fund flow of $17,158,305.00, 30-day fund flow of $223,141,010.00, and 1-week fund flow of -$101,506,425.00. Its net expense ratio of 0.44% is also fairly expensive.
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