best tech etf

5 Best Tech ETFs in 2022: Everything You Need To Maximize Your Profits

The technology sector worldwide continues to evolve rapidly. Any Singaporean that invests in an actively-managed ETF focused on various established and emerging markets in the industry stands to gain from share growth and stable dividend yield per year. Investing in the top ETFs indicates that you’re supporting the growth of technology worldwide.

Here are a few refreshers before you start maximizing profits in the tech sector with the most popular tech ETFs listed below.

What Are The Major Indexes Performing The Technology Sector?

The following indexes classify many tech companies across the United States in various indexes. Each includes blue-chip and top-performing companies

  • First Trust NASDAQ-100 Ex-Technology Sector Index Fund.
  • PowerShares QQQ Trust, Series 1
  • iShares North American Tech Sector Index
  • S&P 500 Technology Index
  • MSCI USA IMI Information Technology Index i
  • Nasdaq 100 Technology Index
  • Russel 3000 Information Technology Index 

 

How Do I Start Investing in Technology ETFs?

Any Singaporean can start investing in technology ETFs by following these steps:

1. Choose a broker operating and offering services to investors in Singapore. You can find a wide range of brokers allowing you to invest in international ETFs that follow tech indexes

2. Register using the broker’s appointed methods. Follow their instructions to the dot to register in the fastest way possible.

3. Start investing in technology ETFs. Some brokers might have higher or lower minimum investment requirements for each ETF, so keep this in mind as part of your expenses.

Top 5 Tech ETFs To Not Miss in 2022

Here are five of the top tech ETFs you shouldn’t miss in 2022 because they’re bound to have value increases year after year.

1. Vanguard Information Technology ETF – VGT

  • Expense Ratio: 0.10%
  • Volume: 492,986
  • Net Assets: $53.51B
  • Shares Outstanding: 123,459,193
  • Dividends: $0.82 (Quarterly)

The Vanguard Information Technology ETF leans towards large tech stocks as its foundations. Half of its assets are in the top 10 market positions in ETFs, but it spreads out its investments in 300 U.S. tech companies to diversify tech progress. VGT tracks the MSCI US Investable Market Index/ Information Technology 25/50, which comprises large, medium, and small U.S.tech companies.

Here are some of the top-performing companies in this ETF.

  • Apple Inc AAPL
  • Microsoft Corporation MSFT
  • NVIDIA Corp NVDA
  • Adobe Inc ADBE
  • Visa Inc – Ordinary Shares – Class A V
  • Salesforce.Com Inc CRM
  • Mastercard Incorporated – Ordinary Shares – Class A MA
  • Cisco Systems, Inc. CSCO
  • Broadcom Inc AVGO
  • Accenture plc – Ordinary Shares – Class A ACN

Five Year Market Performance

Year Dividend Value
2021 $0.821
2020 $0.69
2019 $0.651
2018 $0.641
2017 $0.437


2. Invseco QQQ Trust – QQQ

  • Expense Ratio: 0.20%
  • Volume: 31,918,787
  • Net Assets: $182.60B
  • Shares Outstanding: 525,900,000
  • Dividends: $0.49 (Quarterly)

The Invesco QQQ ETF has 102 holdings and is one of the four popular tech ETFs in the world. The fund tracks the Nasdaq 100 Index that leans heavily on large market-cap tech sector companies. 

Previously, Invesco QQQ ETF was known as PowerShares QQQ Trust. Many investors use this ETF and the Nasdaq index to track the tech sector’s progress in the United States, giving them broad exposure to the world’s top and evolving tech companies. Invesco QQQ has excellent technology stocks from upcoming software companies included in the fund.

Here are some of the companies listed under QQQ:

  • Apple Inc AAPL
  • Microsoft Corporation MSFT
  • Amazon.com Inc. AMZN
  • Tesla Inc TSLA
  • Alphabet Inc – Ordinary Shares – Class C GOOG
  • NVIDIA Corp NVDA
  • Alphabet Inc – Ordinary Shares – Class A GOOGL
  • Meta Platforms Inc – Ordinary Shares – Class A FB
  • Broadcom Inc AVGO
  • Costco Wholesale Corp COST

Five Year Market Performance

Year Dividend Value
2021 $0.49
2020 $0.56
2019 $0.46
2018 $0.42
2017 $0.33


3. Technology Select Sector SPDR Fund – XLK

  • Expense Ratio: 0.10%
  • Volume: 4,132,569
  • Net Assets: $45.65B
  • Shares Outstanding: 295,855,897
  • Dividends: $0.32 (Quarterly)

The XLK is one of the best tech ETF in the world because of its slow but consistent growth, as its dividend pattern indicates. The State Street Global Advisors (SSGA) sponsors the fund and is one of the biggest tech sector funds attempting to match the Technology Select Sector Index.

The TSSI is a snapshot of the overall hardware technology market performance. With this in mind, manufacturers of computers and accessories, developers of software, telecommunication services and communications equipment, semiconductor and semiconductor equipment, and IT service industries are included in this list.

Some blue-chip stocks are included in XLK too. Here’s a list of the companies you’ll find in this fund.

  • Apple Inc AAPL
  • Microsoft Corporation MSFT
  • NVIDIA Corp NVDA
  • Visa Inc – Ordinary Shares – Class A V
  • Mastercard Incorporated – Ordinary Shares – Class A MA
  • Broadcom Inc AVGO
  • Cisco Systems, Inc. CSCO
  • Adobe Inc ADBE
  • Salesforce.Com Inc CRM
  • Accenture plc – Ordinary Shares – Class A ACN

Five Year Market Performance

Year Dividend Value
2021 $0.32
2020 $0.30
2019 $0.30
2018 $0.27
2017 $0.24


4. First Trust Dow Jones Internet Index ETF – FDN

  • Expense Ratio: 0.51%
  • Volume: 134,850
  • Net Assets: $7.25B
  • Shares Outstanding: 38,800,002
  • Dividends: N/A

FDN focuses on technology-Internet segment stocks and is an ETF that doesn’t buy dividend-paying shares. Recently, FDN has amassed about $9.29 billion, making it one of the largest ETFs in the world. The fund tracks the Dow Jones Internet Composite Index that concentrates on Internet-related services and companies. 

Many of the index’s companies had stellar performances year-on-year. Here is a list of companies included in them.

  • Amazon.com Inc. AMZN
  • Alphabet Inc – Ordinary Shares – Class A GOOGL
  • Meta Platforms Inc – Ordinary Shares – Class A FB
  • Cisco Systems, Inc. CSCO
  • Alphabet Inc – Ordinary Shares – Class C GOOG
  • Salesforce.Com Inc CRM
  • NetFlix Inc NFLX
  • PayPal Holdings Inc PYPL
  • Airbnb Inc – Ordinary Shares – Class A ABNB
  • Snowflake Inc – Ordinary Shares – Class A SNOW

Five Year Market Performance

Year Dividend Value
2021 n/a
2020 n/a
2019 n/a
2018 n/a
2017 n/a


5. Amplify Online Retail ETF – IBUY

  • Expense Ratio: 0.65%
  • Volume: 35,253
  • Net Assets: $402.96M
  • Shares Outstanding: 5,950,000
  • Dividends: $0.62 (Annual)

IBUY focuses on the Ecommerce aspect, one of the highly-active industries, making this one of the most popular ETFs around. The fund has shares from the world’s top-performing Ecommerce and service websites, such as Expedia, Booking Holdings, and Amazon. It tracks the EQM Online Retail Index that concentrates on retail companies worldwide.

Here is a complete list of the shares it includes in the fund.

  • Expedia Group Inc EXPE
  • Groupon Inc GRPN
  • Chegg Inc CHGG
  • Amazon.com Inc. AMZN
  • Booking Holdings Inc BKNG
  • Airbnb Inc – Ordinary Shares – Class A ABNB
  • Vivid Seats Inc – Ordinary Shares – Class A SEAT
  • Petmed Express, Inc. PETS
  • Lyft Inc – Ordinary Shares Cls A LYFT
  • Copart, Inc. CPRT

Five Year Market Performance

Year Dividend Value
2021 $0.62
2020 $0.15
2019 n/a
2018 n/a
2017 n/a

 

What Are The Qualities Of Best-Performing ETFs To Invest In?

Asset Level

It’s ideal to invest in ETFs that have at least $10 million assets under management (AUM). ETFs that follow a high-level benchmark index usually have at least $10 million AUM, indicating a high investor interest. Good investor interest indicates high liquidity and good spreads.

Trading Activity

Look at the ETF’s trading volume daily and monthly. If the ETF doesn’t make trades as frequently on these timeframes, it might indicate its lack of liquidity. Higher trading volumes indicate a better spread and liquidity.

The Underlying Index

Tech ETF indexes tend to focus on various aspects and niches of their particular sector. In most cases, it’s better to invest in underlying indexes that have a broad following because of its popularity. Then again, these high-level index-following ETFs have higher investment requirements in most brokers.

Minimal Tracking Error

Tracking error is the difference between an ETF’s performance and the performance of the index it tracks. When an ETF’s performance differs from that of the index it tracks, this is called tracking error. Tracking error is a natural occurrence given the fact that an index is not perfectly diversified and has other limitations, such as how often it is updated. Thus, minimal tracking errors ensure the stability and accuracy of your ETFs value reporting.

Pioneering ETF

The first ETF issuer is always the top ETF in that sector. For example, if the ETF you’ve found is for a specific niche with a high volume of investors interested in it, this ETF will most likely skyrocket.

Another example is how the S&P500 index became the establishing index for the US’ biggest companies, making them the popular pioneering ETF in the niche.

stock market exchange graph analysis

How Should 5G Internet Affect Your Tech ETF Investments?

The rise of 5G may usher in the era of 5G-powered internet access points, which would allow for mobile homes and other remote locations to have easy access to faster internet. This could reduce the dependency on large providers and lower their costs.

The rise of 5G may also trigger a shift in the internet service providers (ISP) industry landscape. 5G is expected to offer significantly faster speeds than the currently widely used 4G networks. Therefore, invest in these sectors according to your risk appetite, diversification and growth objectives, and preferences.

Here are also our picks for best index fund in Singapore.

Our Final Thoughts

Tech ETFs have zero guarantees on growth, but they will most likely evolve because of their continuous use in every person’s life. These top tech ETFs can give you the best chance to ride the rise of tech industries worldwide.

Key Takeaways

  • Tech ETFs are exchange-traded funds that track the performance of a basket of stocks in the technology or IT sector. 
  • Tech ETFs focus on the technology market segment, including Ecommerce, Internet, computer connectivity, information technology, and beyond.
  • Most tech ETFs have blue-chip company shares, such as from Apple and Microsoft, because their underlying index follows them.
  • Each ETF concentrates on a popular niche that a broad index follows, such as computer accessories, cybersecurity, software development, and more.

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