3 Top Alternatives to Cathie Wood’s ARKK

tech etfs - 3 Top Alternatives to Cathie Wood’s ARKK

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When you consider tech ETFs, Cathie Wood has to be in the conversation. And Wood has been brave as of late.

As her flagship fund, the technology heavy ARK Innovation ETF (NYSEARCA:ARKK), plunged in value this spring, the founder and chief executive officer of Ark Investment Management withstood a barrage of criticism and doubled down on many of her holdings.

Between February and May, the value of the ARK Innovation exchange traded fund fell nearly 40% from its 52-week high of $159.70 all the way down to just under $100 a share. Critics claimed that Wood’s fund, which focuses on new and disruptive technologies, was out of synch with the broader stock market.

Yet Wood remained steadfast, buying more shares of companies such as electric vehicle maker Tesla (NASDAQ:TSLA), cryptocurrency exchange Coinbase (NASDAQ:COIN) and virtual healthcare company Teladoc (NYSE:TDOC) as prices slumped. Now, Wood’s moves look to have been the right ones. With the share prices of technology companies rising again, Wood’s Ark Innovation fund recently turned positive for the year.

But the ARKK ETF is not the only game in town. There are many well-managed tech ETFs that are focused on technology stocks and deliver healthy returns to investors.

Here are three top tech ETFs that are alternatives to Cathie Wood’s ARK Innovation ETF.  

  • Vanguard Information Technology ETF (NYSEARCA:VGT)
  • SPDR S&P Software & Services ETF (NYSEARCA:XSW)
  • iShares Evolved U.S. Technology ETF (BATS:IETC)

Tech ETFs: Vanguard Information Technology ETF (VGT)

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Vanguard’s Information Technology ETF is not only a great investment vehicle for people who want exposure to top technology names, the fund is also cheap to own. Vanguard, which is obsessive about keeping its fees low, charges an expense ratio of only 0.1% on its Information Technology ETF. That compares to an industry average expense ratio of 1.04% that’s charged on similar technology ETFs.

Top holdings in VGT include stocks such as Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and PayPal (NASDAQ:PYPL).

In terms of performance, VGT has produced stellar returns for investors. Last year, during the pandemic tech boom, the ETF gained 43%. Over the past five years, the fund has returned nearly 30% to shareholders.

The Vanguard Information Technology ETF delivered a solid return over the past decade. A person who invested $10,000 in the ETF back in 2011 and left it untouched would have $64,500 today. Vanguard’s Information Technology ETF has even managed impressive returns in 2021, up 12% year-to-date despite the market volatility.

SPDR S&P Software & Services ETF (XSW)

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Seeking to track the performance of the S&P Software & Services Select Industry index, the SPDR S&P Software & Services ETF holds a total of 186 stocks, including Asana (NYSE:ASAN), The Trade Desk (NASDAQ:TTD) and Splunk (NASDAQ:SPLK).

Established in 2011, the XSW ETF has an impressive track record with an average rate of return of 22% a year since its inception. The fund posted a 58% return in the past year and gained 243% in the last five years.

The expense ratio on the SPDR S&P Software & Services ETF is more than three times higher than on the aforementioned Vanguard Information Technology ETF, 0.35% versus 0.10%. However, XSW pays a quarterly dividend that yields 0.03%.

Year-to-date, this ETF is up 13%. With investors now moving back to technology growth stocks, the SPDR S&P Software & Services ETF can be expected to continue trending higher throughout this year.

Tech ETFs: iShares Evolved U.S. Technology ETF (BATS:IETC)

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The iShares Evolved U.S. Technology ETF is unique in that it is managed by robots rather than a human fund manager. The robots use language processing and machine learning to select the stocks that the fund holds.

This approach might unnerve some investors, but BlackRock (NYSE:BLK), which owns and operates iShares funds, insists it is remarkably effective and helps to keep fees low. The current expense ratio of IETC is 0.18%, about half the amount charged by the SPDR S&P Software & Services ETF but still more than Vanguard’s Information Technology ETF. 

Top holdings in the iShares Evolved U.S. Technology ETF include Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). This ETF has been established to provide investors with exposure to stocks that leverage technological innovation for the benefit of shareholders.

Only around since 2018, IETC has produced some impressive results during its short lifetime. In the past year, the ETF gained 47%. Since its inception, the fund has returned 260% to its shareholders.

On the date of publication, Joel Baglole held a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2021/06/tech-etfs-3-top-alternatives-to-cathie-woods-arkk/.

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