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Exchange-traded fund (ETF) investing is gaining momentum in 2014 as a popular investment strategy.
ETF investing is very similar to buying stocks. Shares can be bought or sold at any time, and, just like a stock, shares can be sold short, bought on a margin, etc.
One reason ETF investing is increasing in popularity now is because it offers protection from market volatility due to an ETF's inherent structural diversity. This year's markets have been rocky, with more volatility expected.
ETF investing also offers exposure to new, profitable industries, but reduces the risk of just buying one or two stocks within the sector.
That's why it's a great way to play one of this year's fastest-growing industries: wearable tech.
Wearable Tech Industry Outlook is Profitable for Investors
Wearable tech is a burgeoning sector within the tech industry. According to Money Morning Defense & Tech Specialist Michael A. Robinson, wearables have already become a $7 million industry.
He adds that "forecasters…are predicting that wearables will become a $30 million sector a decade from now."
The most prominent example of a popular wearable tech item that's on the market today is the smartwatch. These devices can perform basic calculations and offer media entertainment like games and music downloads. The owner can download personalized applications, check email, stock prices, and more.
Industry specialists say wearable tech is more than just a fad. In fact, Dr. Chris Brauer reported in USA Today that wearable tech is here to stay – and will expand. In Oct. 2013, he concluded that many businesses are already planning to employ wearable tech to improve employee productivity. As these applications expand and improve, tech stocks in companies that provide wearable tech are expected to follow suit.
However, as with any sector involving technology, volatility is a concern.
Products are launched, markets boom, problems sometimes occur, markets wane, and investors can experience financial whiplash as a result. Because there is little market data to tap into, the lack of track record makes investing in this industry all the more risky.
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Tapping into wearable tech via ETF investing provides a safer way for investors to profit from this promising sector. By carefully choosing funds that include tech companies in wearable tech, volatility risk is minimized.
Here are some of the top ETFs to consider that participate in the wearable tech sector.
ETF Investing: Wearable Tech List
- iShares Dow Jones U.S. Technology ETF (IYW)
- SPDR S&P Semiconductor ETF (XSD)
- Fidelity MSCI Information Technology Index ETF (FTEC)
- Vanguard Information Technology ETF (VGT)
- Market Vectors Semiconductor ETF (SMH)
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