About thirty years ago, fans would camp out for tickets to rock concerts and new movies, while technology buffs stayed home dreaming. These days, technology buffs camp out for the release of new products, while media and entertainment industry executives worry if their offerings are still relevant in a world of free content and instant video streaming.
The runaway success of Apple’s iPhone, and Research in Motion’s Blackberry before it, is driving a shift throughout the information technology sector that will likely be felt for years to come. Standard & Poor’s Equity Research recommends investors overweight information technology stocks, and has a positive outlook for the technology sector in 2010, where operating earnings per share are expected to rise by 41%.
There are so many information technology ETFs that several different sub-species are apparent. There are a number of broad-market ETFs which have large portions of their assets invested in technology stocks because they track technology-laden indexes such as the Nasdaq 100 or the MSCI Taiwan index. There are also global and regional technology ETFs and specific industry funds targeting areas like software or networking equipment.
To sift through this large and diverse group, we choose to ignore the “proxy” funds that track broad market indexes with large technology components. Among the 25 or so funds remaining, we looked for funds with at least two of the following: low expense ratio, strong returns over the past year, large asset base, and a list of top holdings that is not dominated by mega-cap stocks like Apple and Microsoft.