Investors nowadays have one heck of a toolbelt to work with, thanks to the Internet, which provides us with a steady stream of stock information, technical analysis, analyst opinions and more.
But once in a while, a great investment idea comes from just taking a moment to look around and smell the roses.
For instance, investors in the late 70s and early 80s who got an early look at a PC and thought to themselves, “Every house in America is going to have one of these!” might have decided that up-and-coming players in the computer world were the place to put their funds. And those who did pour their cash into shares of Apple (NASDAQ:AAPL), IBM (NYSE:IBM) and Microsoft (NADSAQ:MSFT), among others, watched their investments flourish down the road.
Today, investing in specific trends and themes has been made even easier by the proliferation of exchange-traded funds, which now cover almost every niche flavor you can imagine. Granted, a number of these funds are absolute stinkers — the past few months have seen the end of a fishing ETF and a waste management ETF, for instance. But the following three ETFs play to trends that look awfully attractive going forward:
Market Vectors Semiconductor ETF
“After all, chips are in everything from toasters to lawnmowers these days — and demand is growing all the time.… And though I am reluctant to make any assumptions about the world my two girls will live in a few decades from now, I am certain computer chips will be even more ubiquitous than they are today.”
Anyone care to argue? I sure don’t. Semiconductors eventually will be in everything — even us, some conspiracy theorists would contend.
However, holding INTC on its own means worrying about Intel’s weakness in mobile, company-specific supply problems and anything else that might pop up. Similar concerns will accompany any single chip stock. But Van Eck’s Market Vectors Semiconductor ETF (NYSE:SMH) is a much broader play on the whole kit ‘n’ caboodle, bundling some of the biggest U.S.-listed semiconductor names, including Intel, Texas Instruments (NASDAQ:TXN), Broadcom (NASDAQ:BRCM), Micron (NASDAQ:MU) and Advanced Micro Devices (NYSE:AMD).
In fairness, with only 25 holdings — including an almost 20% weighting for INTC — it’s not nearly as diversified as the SPDR S&P Semiconductor ETF (NYSE:XSD), which is much more balanced and has 48 holdings. And having just launched in December 2012, Market Vectors’ fund is considerably greener than the 6-year-old XSD. Year-to-date, SMH is up 16% to XSD’s 10%, though they’ve swapped places several times so far in 2012. Expense ratios also are a wash, too, as both charge 0.35%.
However, I’m giving the nod to SMH because it already has $420 million in assets under management, almost 10 times XSD’s, and is far more liquid.
First Trust ISE Cloud Computing Index Fund
About those semiconductors… For all the talk of toasters, they’re still the horses helping to power the PCs, tablets and smartphones that increasingly are accessing the “cloud.” In short, cloud computing involves using remote servers (usually via the Internet) for everything from raw storage, computing software and games to technical support and customer service.
For instance: Most people are familiar with Microsoft’s Office suite. Well, Office 365 is a cloud subscription service that allows you to use programs like Word and Excel over the Internet from various locations, and also includes other features like document sharing and online meetings.