FAANG stocks — Facebook Inc. FB, Apple Inc. AAPL, Amazon.com Inc. AMZN, Netflix Inc. (NFLX) and Alphabet Inc.’s (GOOG, GOOGL) Google — along with Microsoft Corp. MSFT and Tesla Inc. TSLA take about 25% of the S&P 500. Many are now of the view that these seven behemoths are responsible for the broader market’s hop and drop. These cash-rich companies have swelled in their market capitalization in recent years.
But the trend is probably shifting. Goldman Sachs believes people are over invested in big-cap tech names. “We noticed there was a growing disconnect between where investors are positioned and where we are seeing the most attractive returns over the next decade or so,” said Sung Cho, the portfolio manager of the Goldman Sachs Future Tech Leaders ETF, on Yahoo Finance Live.
“For the last 20 years, it has been focused in the U.S. and in mega cap tech companies. We believe we are at a key inflection point where innovation is expanding beyond the U.S., as well as beyond the market cap spectrum,” according to Cho, as quoted on Yahoo Finance.
And why not? Disruptive technologies are booming, especially with more dependence on technology amid coronavirus-led social distancing. Our dependence on areas like AI, robotics, autonomous vehicles, computer perception, and virtual and augmented reality has been growing.
Quantum computing is another technology holding a lot of potential but is still new in the market. It is expected to transform industries with new artificial intelligence and machine learning applications in few years (read: Market Outlook & Thematic ETF Ideas for Q4).
Against this backdrop, below we highlight a few future tech ETFs that focus on future era tech plays.
ETFs in Focus
Goldman Sachs Future Tech Leaders Equity ETF GTEK
This ETF is active and does not track a benchmark. Marvell Technology (3.1%), MercadoLibre (3.0%) and HubSpot (2.6%) were the top three stocks of the fund. The fund charges 75 bps in fees. The fund looks to keep investors on the right side of disruption by picking innovative, attractively-valued companies associated with durable secular growth themes.
BlackRock Future Tech ETF BTEK
The fund looks to maximize total return by investing in companies developing innovative and emerging technologies in the technology sector. The fund charges 88 bps in fees. No stock accounts for more than 3.62% of the fund. Lightspeed Commerce (3.62%), Silergy Corp. (2.16%) and Marvell Technology (2.02%) are the top three stocks of the fund.
iShares U.S. Tech Breakthrough Multisector ETF TECB
The underlying NYSE FactSet U.S. Tech Breakthrough Index measures the performance of U.S. listed companies engaged in cutting edge research and development of products and services in the areas of robotics and artificial intelligence, cyber security, cloud and data tech, financial technology, and genomics and immunology. The 173-stock fund puts heavy weights on Moderna (4.38%), Nvidia (4.31%) and Microsoft (4.19%).
ALPS Disruptive Technologies ETF DTEC
The underlying Indxx Disruptive Technologies Index identifies companies using disruptive technologies in each of 10 thematic areas: Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments. No stock accounts for more than 1.18% of the fund. Brooks Automation, Allegro MicroSystems and Nemetschek are the top three stocks of the fund.
Amplify Transformational Data Sharing ETF BLOK
This ETF is active and does not track a benchmark. Transactional services take about 32% of the fund while crypto miner (24%), venture (11%) and semiconductor (10%) take the next three spots. The fund charges 71 bps in fees.
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Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
ALPS Disruptive Technologies ETF (DTEC): ETF Research Reports
iShares U.S. Tech Breakthrough Multisector ETF (TECB): ETF Research Reports
BlackRock Future Tech ETF (BTEK): ETF Research Reports
Goldman Sachs Future Tech Leaders Equity ETF (GTEK): ETF Research Reports
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