Choosing the right exchange-traded fund for you means searching through a long ETF list of candidates - which is why we cut down the list to three solid picks for you today.
It's a great time to make a pick from this technology ETF list. The Nasdaq is up 6.2% in 2015, whereas the Dow is only up about 1.3%.
Why is the Nasdaq outperforming?
"For its part, the Nasdaq is much more a growth story," Money Morning Defense and Tech Specialist Michael A. Robinson said last month. "It's brimming with younger, more aggressive firms in growth fields like biotech, the mobile revolution, cloud computing, Big Data, and the connected car."
When compared to the S&P, Robinson found:
- Over the past year, the Nasdaq wins by 62%, with 15.3% profits compared to the S&P's 9.4%.
- Over the past two years, the Nasdaq wins by 57%, with 51.8% profits compared to the S&P's 33%.
- Over the past five years, the Nasdaq wins by 35%, with 99% profits compared to the S&P's 73%.
Robinson believes "all the elements are in place for tech stocks to continue beating the overall market for the rest of 2015 and in the foreseeable future."
That's why he says investors who don't want to settle for the stock market's middling returns must invest in technology.
What better way to get started than a technology ETF list with three of our favorite picks. Each one will rise from its high-growth holdings and let investors get a piece of tech's best profits.
Take a look at our latest ETF list here...
Technology ETF List, No. 1: "You'll Want to Own This for a Long, Long Time"
The first entry on our tech ETF list is the Fidelity Nasdaq Composite Index Tracking Stock (Nasdaq: ONEQ). ONEQ mirrors the returns of the Nasdaq Composite.
Robinson calls it a "great foundational type of investment" that investors will want to own for a "long, long time - if not forever."
Big-cap tech dominates ONEQ. This diversified fund of some 1,919 stocks allows investors to own piece of pricy companies that otherwise might be out of reach.
The top 10 holdings are stock market A-listers in mobile, the Internet, cloud computing, biotech, and e-commerce. They include Apple Inc. (Nasdaq: AAPL), Amazon.com Inc. (Nasdaq: AMZN), and Google Inc. (Nasdaq: GOOG, GOOGL).
Like the Nasdaq Composite, it's not all tech. This tech ETF also holds a cache of consumer services companies and financial firms, such as Starbucks Corp. (Nasdaq: SBUX) and T. Rowe Price Group Inc. (Nasdaq: TROW).
Shares are up 6.4% year to date and 20% in the past year.
Technology ETF List, No. 2: Collect as Billions Pour into This Sector
"Cyberthreats pose one of the most serious economic and national security challenges to the United States," President Barack Obama said in a statement earlier this year.
As such, the U.S. commander-in-chief has requested $14 billion in his 2016 fiscal-year budget for increased cyber defense. Roughly $5.5 billion of that is requested just for the Pentagon.
The White House's commitment to cyber defense means billions of dollars will start flooding into cybersecurity companies. That means some lucrative opportunities exist for investors.
"The money spent on cyber defense represents one of the highest profit potentials of anything I've encountered," Money Morning's Small-Cap Investing Specialist Sid Riggs said. "And the growth numbers spotlight not just one company but an entire sector that will have the wind at its back for the rest of our investing lifetimes."
That's why Riggs gave us the PureFunds ISE Cyber Security ETF (NYSE Arca: HACK) for this tech ETF list.
HACK gives investors a piece of 31 cybersecurity sector leaders at once. Many of the fund's holdings are software companies focused on combating security beaches.
"One of the things I really like about HACK is its industry-specific diversity," Riggs said.
"HACK is most heavily invested in the systems software industry, which will prove to be a great stabilizing force for the fund. That's the sphere of the IT sector that's been growing most reliably since 2010, with the consulting firm Gartner Inc. already forecasting enterprise software to grow by 7.3% in 2015."
HACK is up 13.5% year to date.
Technology ETF List, No. 3: Profit from Asia's New High-Tech Investment Capital
"The world's next big center for semiconductor production isn't going to be somewhere on the U.S. West Coast, writes Money Morning Executive Editor William Patalon III. "It won't be in South Korea, Taiwan, or somewhere in mainland China. It will be Ho Chi Minh City."
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Patalon explained in December that CPUs for 80% of the world's new PCs this year will be produced at an Intel Corp. (Nasdaq: INTC) plant in the Saigon H-Tech Parks near Ho Chi Minh City.
Former Intel CEO Paul Otellini said his company "helped put Vietnam on the map for high-tech investment."
Indeed, foreign investment in Vietnam is booming - especially in tech.
Investors can get in on the action with the Market Vectors Vietnam ETF (NYSE Arca: VNM). The fund, with a current net asset value of $447.2 million, presently holds a basket of 29 stocks.
Patalon says to look at the Vietnam ETF as a long-term investment.
"Start out with a smallish investment - less than 1% of your holdings - and look to add gradually on declines until you have the position you want," Patalon suggests. "Use a multi-year horizon on this one. Down the road, you'll be glad you did."
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