Wall Street has regained momentum this week. The S&P 500 and Nasdaq surged to record highs for the fourth consecutive day driven by the surge in the information technology sector, which is most vulnerable to trade wars. This is especially true as optimism over trade negotiations and solid rebound in broad-based technology and Internet stocks buoyed up sentiments.
Both United States and Mexico agreed to a bilateral deal, which will rewrite North American Free Trade Agreement (NAFTA) and allow Trump to impose 25% tariffs on imports of Mexican-made passenger vehicles and auto parts above certain volumes. Meanwhile, Canada also rejoined NAFTA talks and optimism over an imminent trade deal with the United States bolstered sentiment.
Among the FAANGs, Amazon (NASDAQ: AMZN ) and Alphabet (NASDAQ: GOOGL ) got a boost after Morgan Stanley lifted its price target on both the stocks while Apple (NASDAQ: AAPL ) hit an all-time high, closing at $222.98.
Rounds of upbeat data signaling improving economic growth provided a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle. Notably, the U.S. economy is growing little bit faster than earlier estimated. Per the second reading of the Bureau of Economic Analysis, GDP growth rose 4.2%, up from the initial reading of 4.1% last month.
Americans continue to be optimistic as the Consumer Confidence Index, as measured by the Conference Board, jumped to 133.4 - the highest level since October 2000 - from the revised 127.9 in July.
While the winners are broad based across the sector, we have highlighted five ETFs that are easily leading the current technology surge. These ETFs have gained nearly 5% over the past week.
Tech ETFs Leading the Surge This Week: First Trust Technology AlphaDEX Fund (FXL)
The First Trust Technology AlphaDEX Fund (NYSEARCA: FXL ) follows an AlphaDEX methodology by tracking the StrataQuant Technology Index and ranks stocks in the space on various growth and value factors, eliminating the bottom-ranked 25% of the stocks.
The approach results in a basket of 89 stocks that are well spread out across each security with none holding more than 2.43% of assets. From a market-cap look, mid-caps account for 49% share while large caps take the remainder with 3% going to small caps.
The fund is rich with AUM of $2.2 billion and average trading volume of around 146,000 shares. It charges 63 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Tech ETFs Leading the Surge This Week: Invesco DWA Technology Momentum ETF (PTF)
The Invesco DWA Technology Momentum ETF (NASDAQ: PTF ) follows the Dorsey Wright Technology Technical Leaders Index and provides exposure to companies that showing relative strength (momentum).
Holding 43 stocks in the basket, it is well diversified with each holding constituting less than 7.3% share. The product is well spread across various market spectrums with large caps at 39%, mid-caps at 33% and small caps at 29%.
PTF is illiquid and relatively unpopular with AUM of $154.5 million and average daily volume of 8,000 shares. It has a Zacks ETF Rank #1 with a High risk outlook.
Tech ETFs Leading the Surge This Week: iShares North American Tech-Software ETF (IGV)
The iShares North American Tech-Software ETF (BATS: IGV ) provides exposure to the software segment of the broader U.S. technology space by tracking the S&P North American Technology-Software Index.
Holding a basket of 64 securities, it is moderately concentrated on the top four firms, which account for a combined 34.2% of the assets. The fund is focused on large caps securities at 75%, followed by mid-caps (20%) and the rest small-caps.
It charges 47 bps in annual fees and has AUM of $2.1 billion. Volume is good as it exchanges nearly 295,000 shares a day. IGV has a Zacks ETF Rank #2 (Buy) with a High risk outlook.
Tech ETFs Leading the Surge This Week: ARK Innovation ETF (ARKK)
The ARK Innovation ETF (NYSEARCA: ARKK ) is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvement and advancements in scientific research related to genomic companies, industrial innovation companies or Web x.0 companies.
In total, the fund holds 46 securities in its basket, with each accounting for less than 8.5% share. About half of the portfolio is allocated to large-caps while small-caps take 41% and mid-caps the rest.
The product has amassed $1.4 billion in its asset base and trades in a good volume of about 336,000 shares. Expense ratio comes in at 0.75%.
Tech ETFs Leading the Surge This Week: AdvisorShares New Tech and Media ETF (FNG)
The AdvisorShares New Tech and Media ETF (NYSEARCA: FNG ) is also an actively managed ETF designed to invest in companies that are driving economic growth in the modern era and can adapt to changing leadership by maintaining the ability to invest in next generation of technology and media companies leading the equity markets.
It seeks to provide a similar return stream to the performance of technology and media equity leaders as characterized by the FANG stocks acronym. This approach results in a basket of 27 stocks with none holding more than 6.6% share. Here, large-caps account for 69% while the rest is evenly split between mid and small-caps.
FNG has amassed $37.2 million in its asset base and comes with a high expense ratio of 0.85%. Volume is light at 28,000 shares.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.