Tech ETFs: A Closer Look
Over the past few decades, tech exchange-traded funds (ETFs) have emerged as some of the top-performing investments. They provide a convenient way for investors to diversify into the best tech stocks all in one package. This includes well-known giants like Nvidia and Apple, alongside lesser-known but potentially promising companies like SanDisk and Micron Technology.
Some well-regarded tech ETFs, including Invesco QQQ (NASDAQ:QQQ), Vanguard Information Technology ETF (NYSEMKT: VGT), State Street Technology Select SPDR ETF (NYSEMKT: XLK), and iShares US Technology ETF (NYSEMKT: IYW), have generated substantial returns over the years.
Interestingly, one often overlooked ETF is the Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF). If you’re considering a tech ETF, you might want to add this one to your list.
The Best Invesco ETF — It’s Not QQQ
The Invesco Dorsey Wright Technology Momentum ETF tracks a specific index, the Dorsey Wright Technology Technical Leaders Index, which monitors at least 30 tech stocks worldwide that exhibit strong momentum.
Stocks in this ETF are selected based on a unique methodology that identifies those with the highest momentum scores. The portfolio encompasses at least 30 companies drawn from a variety of technology sectors, including small-cap, mid-cap, and large-cap stocks.
Currently, the ETF comprises 40 stocks, with SanDisk, Nvidia, and Apple being the three largest holdings. Among smaller companies, you can find CACI International, InterDigital, and Vistan Networks.
Launched in 2006, this ETF has posted an impressive average annual return of 21%. When you look over different time frames—1 year, 5 years, and 10 years—it has returned 88%, 23%, and 26%, respectively. This performance outpaces many of its competitors, and as of May 21st of this year, it has enjoyed a staggering return of 58%.
While the ETF carries a higher-than-average expense ratio of 0.6%, its consistent outperformance might justify the cost.
It’s worth mentioning that this ETF is quite concentrated and belongs to a sector known for aggressive growth, which makes it susceptible to considerable volatility. However, due to its diversified holdings in trending technology stocks, it has outperformed the Nasdaq, even during down years like 2022.
For those looking to build a tech component in their portfolio, this undervalued ETF could be worth considering. It consistently includes top-performing stocks in the tech sector, although, as a more aggressive fund, it should occupy only a small portion of a well-rounded investment strategy.
Should You Buy Invesco Dorsey Wright Technology Momentum ETF?
Before making any decisions on purchasing shares of the Invesco Dorsey Wright Technology Momentum ETF, there’s some information to consider.
An analyst team has compiled a list of what they believe to be the 10 best stocks to buy right now, and interestingly, this ETF wasn’t included. Those stocks are expected to produce strong returns in the upcoming years.
When looking back, for instance, if you invested $1,000 in Netflix based on a recommendation from December 17, 2004, it would have grown to $477,813! And similarly, a $1,000 investment in Nvidia as of April 15, 2005, could have soared to $1,320,088.
It’s essential to highlight that the stock advisor’s average total return stands at a formidable 986%, especially when contrasted with the S&P 500’s 208%. It might be worthwhile to join an investment community that thrives on the collective insight of retail investors.
