These funds are off the beaten path.
Literally dozens of exchange-traded funds offer investors a host of ways to invest in the tech sector. However, the mainstream conversation is usually limited to a select few, such as the Technology Select Sector SPDR Fund (ticker: XLK) or the iShares U.S. Technology ETF (IYW). There’s nothing wrong with these ETFs — they offer cheap, broad-based tech exposure. But investors and even traders looking for more tactical plays on specific industries within the technology space have several lesser-ballyhooed options at their disposal.
PureFunds ISE Cyber Security ETF (HACK)
The HACK ETF of cybersecurity stocks is probably the most well-known of these lesser known tech funds, if only because its name pops up every time a major cybersecurity breach or virus outbreak makes the rounds. For instance, HACK jumped more than 3 percent in a single day after the WannaCry outbreak torched computers worldwide. PureFunds’ ETF invests in both pure-play cybersecurity stocks such as FireEye (FEYE) and Imperva (IMPV), as well as indirect plays such as Cisco Systems (CSCO) and Booz Allen Hamilton Holding Corp. (BAH) that offer cybersecurity solutions as part of a broader array of services and products.
Expenses: 0.6 percent, or $60 per $10,000 invested annually
Global X FinTech ETF (FINX)
Global X’s FinTech ETF is a collection of companies that are either disrupting banks, insurers and other financial institutions — or helping those institutions fight back with their own technological products. The fund includes some names that you’d expect, such as PayPal Holdings (PYPL) and Square (SQ), which provide payment and processing solutions, as well as online lending exchange LendingTree (TREE). But it also includes old-guard fintech firms such as First Data Corp. (FDC), which handles nearly half of America’s credit and debit transactions. FINX actually encompasses a wide array of businesses, but most of them will be lifted by an increasingly cashless and tech-savvy society.
Expenses: 0.68 percent
PureFunds Video Game Tech ETF (GAMR)
Gaming may be shifting from console base to more mobile-based, but it’s an evolving and growing field — not a dying one. Technologies such as artificial intelligence and virtual reality promise to both grow this area and blur gaming with education and other fields, and that’s a boon for GAMR. This ETF holds game developers like Activision Blizzard (ATVI) and China’s Chanyou.com (CYOU), but also retailers such as GameStop Corp. (GME) and even red-hot chipmakers such as Advanced Micro Devices (AMD) and Nvidia Corp. (NVDA). The result is a fund that has clobbered XLK since early 2016 inception, 56 percent to 31 percent.
Expenses: 0.75 percent
The 3D Printing ETF (PRNT)
The 3-D printing boom of a few years back saw companies like 3D Systems Corp. (DDD) shoot up more than 800 percent from the start of 2012 to 2014, just to lose it all and then some by the start of 2016. PRNT has emerged in the wake of the hype-reality boom and bust, coming to life in mid-2016 amid what still is a promising future for 3-D printing companies, which research firm McKinsey says could grow from $4 billion in 2014 to $490 billion in 2025. PRNT holds 3-D printing companies like DDD and Exone Co. (XONE), but also CAD and simulation software plays such as Autodesk (ADSK).
Expenses: 0.66 percent
Robo Global Robotics & Automation Index ETF (ROBO)
As the name implies, ROBO invests in companies that offer robotics- or automation-related products and/or services, which covers a wide net including unmanned vehicles, 3-D printers and medical robots, among other things. ROBO typically is invested 40 percent in so-called “bellwether” robotics plays (more pure-play), and 60 percent in “non-bellwether” (have a robotics or automation arm that, as it expands, should drive higher revenues). Thus, this 85-stock portfolio includes sexy plays such as drone-maker AeroVironment (AVAV) and consumer-focused Roomba maker iRobot (IRBT), as well as corporate automation giants such as ABB Ltd (ABB) and Siemens.
Expenses: 0.95 percent
Global X Lithium & Battery Tech ETF (LIT)
The final “thematic” fund on this list is also one of the most holistic, as Global X’s LIT invests in companies involved in the cycle of producing lithium — one of the keys to energy storage as the world switches to alternative energy sources. That starts all the way at mining, via 15 percent holding Sociedad Quimica y Minera de Chile (SQM), a Chilean miner of lithium, among other chemicals. But it also includes the end products, made by companies such as Panasonic and Tesla (TSLA), which began mass-producing batteries together earlier this year at the latter’s Nevada Gigafactory.
Expenses: 0.76 percent
KraneShares CSI China Internet ETF (KWEB)
Most asset classes include a few ways to gain international exposure, and tech is no different. One that stands out is KraneShares’ KWEB, a Chinese internet-focused fund whose performance has obliterated major market and tech-sector indices alike in 2017. KWEB might not make headlines, but its holdings are the rock stars of the tech world right now. Tencent, one of China’s largest internet companies and parent of WeChat, made waves with a 5 percent stake in Tesla earlier this year. E-commerce giant Alibaba Group Holding (BABA) is the world’s largest retailer. And online travel specialist Ctrip.com International (CTRP) has exploded over the past five years.
Expenses: 0.72 percent
Emerging Markets Internet and E-Commerce ETF (EMQQ)
If you want to harness the power of Chinese technology in a more diversified way, consider the EMQQ, which is a broader emerging-market play that tackles areas such as social media, e-commerce and search in China, but other enormous markets such as India, Indonesia and Nigeria to leverage an explosion in consumption. For instance, EMQQ holds South African-based Naspers, whose internet operations span e-commerce, online payments and classified ads; MercadoLibre (MELI), Latin America’s top e-commerce site by visitors; and Russian search giant Yandex (YNDX), which also serves Ukraine, Belarus and Kazakhstan.
Expenses: 0.86 percent
BlueStar TA-BIGITech Israel Technology ETF (ITEQ)
You don’t get much more niche than a technology ETF centered around Israel, the world’s 98th most-populous country. But Israel has a significant presence in several tech trends, including big data, cybersecurity and autonomous driving, and that should push it higher in years to come. Top holding Mobileye NV (MBLY) will soon be folded into Intel Corp. (INTC), which bought it out earlier in 2017. But the fund also has sizable assets invested in well-known tech stocks such as IT security provider Check Point Software Technologies (CHKP) and analytics firm Verint Systems (VRNT), among its other 50-plus holdings.
Expenses: 0.75 percent
Direxion Daily Technology Bull 3x Shares ETF (TECL)
Traders who want to make big, leveraged bets on technology for significant short-term profits can do so via Direxion’s TECL. Like other Direxion products, TECL is designed to provide leveraged returns based on a popular index — in this case, the S&P Technology Select Sector Index, which powers the XLK. TECL offers 3 times the daily return of this index, meaning if the XLK gains 1 percent in a day, this fund will generate 3 percent after fees and other costs. Naturally, you risk exaggerated losses should tech stocks drop while you hold it. But for most of its life, TECL has been a decent bet.
Expenses: 1.08 percent (includes 2-basis-point fee waiver)
More from U.S. News
U.S. News & World Report’s 10 Top-Ranked ETFs
9 Blue-Chip Powerhouse ETFs to Buy
10 Great Tech ETFs That Stay Under the Radar originally appeared on usnews.com
