Where should you look in the never-ending quest to find the best stocks? So far this year, the S&P 500 is up a measly 1.7%; the NYSE is up a miserly 1.1%; while the Dow Jones Industrial Average has gained an underwhelming 0.3%.
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Technology Stocks Leading the Way in 2015
The tech-heavy NASDAQ, on the other hand, is up an impressive 6.1% since the beginning of January. Even the technology sector has been performing well. The Dow Jones Technology index, which climbed nearly 19% in 2014, continues to build on that momentum, up 2.5% in 2015. Recall if you will; the broader Dow Jones has eked out just a 0.3% gain so far this year.
With the U.S. showing signs of sustained recovery, 2015 should continue to be a good year for big technology stocks. It has already been a good year—for some at least.
Facebook, Inc. (NASDAQ/FB) is up almost four percent; Apple, Inc. (NASDAQ/AAPL) has advanced more than 15%; while Amazon.com, Inc. (NASDAQ/AMZN) is up an eye-watering 125%.
2015 has not been kind to all technology stocks. Technology stalwart Microsoft Corporation (NASDAQ/MSFT) is up 0.08%—or a princely $0.04 per share. Google Inc. (NASDAQ/GOOG) has climbed 0.12% ($0.56). Twitter, Inc. (NYSE/TWTR) was riding high earlier this year but is no longer; down nearly six percent since January.
Investors looking to invest in the technology sector in 2015 that want to avoid exposure to any one technology stock might want to consider the following technology exchange-traded funds (ETFs).
A tech ETF is a great way for investors to diversify their portfolio. It’s a basket of stocks rather than just one stock. And if you think the run in the technology sector is going to continue, a tech ETF is a great way to go.
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3 Tech ETF Stocks to Watch in 2015
1. Fidelity Nasdaq Composite Tr Stk ETF (NASDAQGM/ONEQ)
This foundational tech ETF tracks the NASDAQ and holds a basket of 1,913 stocks. The ETF provides investment returns that closely correspond to the price and yield performance of the NASDAQ. The fund normally invests at least 80% of assets in common stocks in the index. (Source: Fidelity.com, June 16, 2015.)
The biggest holding by weight at 9.60% is Apple, followed by Microsoft (4.85%), Amazon (2.55%), Facebook (2.35%), Google Class C shares (2.3%), Gilead Sciences (2.29%), and Google Class A shares (2.07%). Intel Corporation (1.93%), Cisco Systems, Inc. (1.89%), and Comcast Corporation (1.66%) round out the top 10.
The Fidelity Nasdaq Composite Tr Stk ETF (NASDAQGM/ONEQ) has $577.8 million under management, daily volume of 10, 592 shares, and an expense ratio of 0.21%. Over the last year, the ETF is up 16.60%. Year-to-date, it’s up 6.6%. By comparison, the NASDAQ is up 17.5% year-over-year and 6.2% year-to-date.
2. Powershares QQQ Trust, Series 1 (NASDAQGM/QQQ)
The PowerShares QQQ Trust, Series 1 (NASDAQGM/QQQ) (formerly known as QQQ or the NASDAQ-100 Index Tracking Stock) tracks the NASDAQ-100 Index. (Source: Invesco.com, June 16, 2015.)
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The NASDAQ Stock Market based on market capitalization. Both the fund and the index are rebalanced quarterly and reconstituted annually.
While it’s listed as the NASDAQ-100, the ETF actually holds 107 securities. Some of the companies listed on the NASDAQ-100 Index include Apple Inc., Microsoft Corporation, Amazon.com Inc., Facebook, Inc., and Google Inc.
As for sector allocation, Information Technology accounts for 55.95% of holdings; Consumer Discretionary for 19.46%; Health Care for 15.22%; Consumer Staples for 6.22%; Industrials for 2.05%; Telecommunications for 0.79%; and Materials for 0.23%.
The PowerShares QQQ has a price/earnings ratio of 20.75; price/book ratio of 4.68; a return on equities (ROE) of 23.96%, and total expense ratio of 0.20%. The average market cap of the companies listed on the QQQ is $211.4 million, while the entire fund has a market value of $38.1 trillion.
The Powershares QQQ is up 5.2% year-to-date while the NASDAQ-100 Index is up 4.7% since the beginning of January.
3. PureFunds ISE Cyber Security ETF (NYSEArca/HACK)
The PureFunds ISE Cyber Security ETF (NYSEArca/HACK) is the world’s first cyber security ETF. And just in time as far as investors are concerned. (Source: Pureetfs.com, June 16, 2015.)
In early June, it was announced that the U.S. was the target of the largest security breach of federal employee data, involving at least four million current and former government workers. The target appeared to be Social Security numbers. The attack was launched, officials say, in China. (Source: nytimes.com, June 4, 2015.)
This is where the PureFunds ISE Cyber Security ETF comes in. The tech ETF is a portfolio of companies providing cyber security solutions that include hardware, software and services. HACK seeks investment results that correspond generally to the price and yield, before fund fees and expenses, of the ISE Cyber Security Index.
This cyber security tech fund ETF is comprised of 31 holdings. The top five holdings include cyber security pioneers; CyberArk Software, Ltd. (NASDAQ/CYBR) at 6.09%, FireEye, Inc. (NASDAQ/FEYE) at 5.96, Infoblox, Inc. (NYSE/BLOX) at 5.14%, Palo Alto Networks, Inc. (NYSE/PANW) at 4.89%, and Fortinet Inc. (NASDAQ/FTNT) at 4.78%.
HACK is more than just a pure cyber security ETF. HACK also holds stocks that sell hardware and other cyber security-related products and services, including Cisco Systems, Inc. (NASDAQ/CSCO) and Jupiter Networks, Inc. (NYSE/JNPR).
The fund has net assets of $990.12 million, average daily volume of 638,000, and an expense ratio of 0.75%. The ETF only began in November 2014 but is already up 32% since then and up 23% since the beginning of this year. Since the beginning of June, the ETF has surged 7.5%.