It’s hard to argue with the idea that, over the last few years, there have been more exciting tech innovations than at any other time since the dawn of the internet. For risk-averse investors and those who don’t have the time and/or the expertise to analyze individual stocks, tech ETFs are a great way to profit from recent technological leaps.
There are a variety of attractive tech trends in which to invest. Robots and vehicles, for example are becoming more autonomous, while e-commerce has become much easier to use and more efficient than it was even a few years ago. Meanwhile, amid the work-from-home trend and the autonomous boom, cybersecurity has become much more critical. Over the next few years, these technologies should all become way more advanced and popular.
Further, there’s little doubt that the novel coronavirus has made e-commerce more ubiquitous, while increasing companies’ vulnerability to hackers and making the delivery of goods more widespread, The latter trend, in turn, has raised the value of autonomous vehicles and robots.
Investors can use these four tech ETFs to play these top trends:
- Global X Ecommerce (NASDAQ:EBIZ)
- Ark Next Generation Internet (NYSE:ARKW)
- Global X Cybersecurity ETF (NASDAQ:BUG)
- Ark Autonomous Technology & Robotics ETF (BATS:ARKQ)
Tech ETFs to Buy: Global X Ecommerce (EBIZ)
Although e-commerce’s growth is likely to slow after the pandemic is over, consumers have clearly gotten used to relying more on e-commerce during the outbreak. As a result, since most people are creatures of habit, the phenomenon should continue to grow quite rapidly going forward.
Other factors that should keep e-commerce stocks sizzling are the increased speed of deliveries, continued strong network effects as more and more companies sell their goods online, and the entrance of younger generations who have grown up with e-commerce into the workforce.
The Global X Ecommerce ETF is a good choice for growth investors; its top holdings feature multiple companies, including China’s JD.com (NASDAQ:JD), Latin America’s MercadoLibre (NASDAQ:MELI), and artisan-oriented website Etsy (NASDAQ:ETSY). These companies are expanding rapidly and have tremendous growth opportunities going forward.
Over the last six months, EBIZ ETF has surged nearly 50%, showing that its largest components are well-loved by the market.
ARK Next Generation Internet (ARKW)
Speaking of strong performers, ARKW ETF has soared nearly 300% since its March low. That’s truly an amazing performance for an ETF.
Last month, Marketwatch noted that ARK Next Generation ETF, led by the very well-regarded Cathie Wood, was one of the best-performing ETFs in 2020, returning 220% and 511% over the last three and five years, respectively.
Constituting 11% of the ETF’s holdings, Tesla (NASDAQ:TSLA) has of course been a huge winner in recent months, amid the boom of electric-vehicle stocks. I’ve been skeptical about Tesla in the past, but I have learned that the stocks of rapidly growing companies that have developed “cool” brands usually do quite well.
Moreover, I remain a huge fan of the ETF’s second-largest holding, Roku (NASDAQ:ROKU). Also in its top ten are three e-commerce stocks with tremendous growth potential: Zillow (NASDAQ:Z), Pinterest (NYSE:PINS), and Sea (NYSE:SE).
And importantly, Wood’s very impressive track record makes ARKW ETF a buy.
Global X Cybersecurity ETF (BUG)
Over time, the work-from-home trend is likely to cause spending on cybersecurity to soar. “Most people’s personal computers, smartphones and other devices aren’t secure beyond a simple antivirus program or firewall,” Business News Daily reported in June.
Consequently, companies are going to need to spend a great deal of money on ensuring that the devices of their employees working from home are secure.
Also likely to greatly boost cybersecurity spending are the autonomous-vehicle megatrend, the Internet of Things megatrend, the increased use of robots, and the proliferation of wearables. As more critical, connected devices are utilized, more endpoints have to be protected from hackers. And the latter development, in turn, will greatly increase the revenue of cybersecurity companies.
BUG ETF appears to be one of the best pure-play IT security ETFs. Among its top holdings are cloud-security company Zscaler (NASDAQ:ZS), identity-management leader Okta (NASDAQ:OKTA), and Palo Alto (NYSE:PANW), a top provider of security-management projects. Also in its top 10 are the rapidly growing IT security company Fortinet (NASDAQ:FTNT), and an identity governance firm, Sailpoint Technologies (NYSE:SAIL), whose stock has already jumped 84% this year.
Ark Autonomous Technology & Robotics (ARKQ)
Alphabet’s (NASDAQ:GOOG,NASDAQ:GOOGL) Waymo is already providing autonomous rides without human drivers in the Phoenix area, and General Motors’ (NYSE:GM) Cruise unit is set to do the same by the end of next month. Meanwhile, multiple companies are using or testing self-driving vehicles or drones for deliveries or to transport passengers along fixed routes. It seems that we are almost upon the autonomous era.
And as I pointed out in a previous column, “The cloud, e-commerce, streaming, and 5G have all been more popular areas. Yet AI, with its true empowerment of computers, will change our world much more than all those other technologies. And one of the best ways to invest in AI is through robotics stocks.”
All of this makes the Ark Autonomous Technology & Robotics ETF one of the top tech ETFs right now. Among its top holdings are Tesla, which is working on self-driving technology and Alphabet. Also making the cut are two of the few 3D printing stocks that have actually performed well: Materialise (NASDAQ:MTLS) and Proto Labs (NYSE: PRLB)
ARKW ETF is up about 130% from its March low.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, Plug Power, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.