The technology sector includes companies focused on the research, development, and sale of a broad range of hardware and software used by consumers and businesses. It includes giants such as Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN), as well as many fast-growing younger companies. The sector has been a major driver of overall gains in the stock market. The acceleration of the migration to online commerce amid the COVID-19 pandemic has intensified the importance of technology companies.
- The technology sector dramatically outperformed the broader market over the past year.
- The ETFs with the best 1-year trailing total return are BLOK, ARKW, and ARKK.
- The top holding of BLOK is Class A shares of MicroStrategy Inc., and the top holding of ARKW and ARKK is Tesla Inc.
There are 68 distinct technology ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). The technology sector, as measured by the S&P 500 Tech Sector Index, has dramatically outperformed the broader market with a total return of 42.6% over the past 12 months compared to the S&P 500's total return of 24.6%, as of February 25, 2021. The best-performing technology ETF, based on performance over the past year, is the Amplify Transformational Data Sharing ETF (BLOK). We examine the best 3 technology ETFs below. All numbers below are as of February 27, 2021.
- Performance over 1-Year: 187.3%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 1.26%
- 3-Month Average Daily Volume: 870,946
- Assets Under Management: $1.2 billion
- Inception Date: January 17, 2018
- Issuer: Amplify
BLOK is a multi-cap blended fund that is actively managed. It aims to invest at least 80% of its net assets in companies involved in the development and utilization of blockchain. BLOK provides a way to gain exposure to companies linked with cryptocurrencies through blockchain technology without investing directly in digital tokens. The fund holds about 57 names in its portfolio, with more than 43% of its assets focused in the top 10 holdings. The top holdings of BLOK include Class A shares of MicroStrategy Inc. (MSTR), a provides enterprise analytics and mobility software, as well as cloud computing services; Hut 8 Mining Corp. (HUT:TSE), a Canada-based Bitcoin mining company; and Sponsored ADR Class A shares of Canaan Inc. (CAN), a China-based maker of hardware related to blockchain and cryptocurrency mining.
- Performance over 1-Year: 161.7%
- Expense Ratio: 0.79%
- Annual Dividend Yield: 1.18%
- 3-Month Average Daily Volume: 1,695,189
- Assets Under Management: $8.7 billion
- Inception Date: September 30, 2014
- Issuer: ARK Investment Management
ARKW provides exposure to technology stocks that define the "Next Generation Internet. That means stocks of companies engaged in artificial intelligence (AI), big data, cloud computing, cybersecurity, and blockchain technology. The ETF is focused on large-cap growth stocks within the U.S. technology sector. About 40% of the fund is allocated to information technology (IT) stocks, while 29% is allocated to communication services, and 15% to the consumer discretionary sector. The fund's top three holdings include Tesla Inc. (TSLA), an electric vehicle and clean energy company; Grayscale Bitcoin Trust (GBTC), a digital currency investment vehicle; and Class A shares of Square Inc. (SQ), a provider of mobile payment solutions.
- Performance over 1-Year: 156.1%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 1.58%
- 3-Month Average Daily Volume: 7,870,443
- Assets Under Management: $25.1 billion
- Inception Date: October 31, 2014
- Issuer: ARK Investment Management
ARKK provides exposure to companies engaged in "disruptive innovation," such as AI, DNA technologies, energy innovation, automation and manufacturing, financial technology, and cloud computing. The ETF is focused on growth stocks of various market capitalizations within the U.S. tech sector. Nearly 32% of the fund is allocated to healthcare stocks, while 29% is allocated to information technology, and 21% to communication services. The fund's top three holdings include Tesla; Class A shares of Roku Inc. (ROKU), a provider of wireless devices for streaming Internet audio and video content; and Class A shares of Square.
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