Top Tech ETFs Right Now

Shashank Jacob

Contributor, Benzinga

October 19, 2020

There’s just no stopping technology. Every industry heavily depends on it.

However, in the investment world, some tech companies perform well while others don’t. If you are an investor who wants to invest in the tech sector with minimal risk, then technology exchange-traded funds (ETFs) might be a safe bet. 

Unlike direct investments in stocks, an ETF allows you to invest in the total technology market by bundling the assets of several different companies into 1 product. You can invest in the ever-changing tech industries without doing homework on individual stocks.

Check out Benzinga’s list of ETFs to make an informed decision about your next tech investment.

Best Tech ETFs Right Now

Check out the these tech ETFs!

Direxion Daily Dow Jones Internet Bear 3X Shares

The Direxion Dailly Dow Jones Internet Bear 3X Shares (NYSEARCA:WEBS) adds to Direxion’s expansive ETF lineup. This ETF puts more than 8% of its holdings to the two share classes of Alphabet. The Fund invests in swap agreements, futures contracts, short positions or other financial instruments that offer inverse or short leveraged exposure to the index.

Virtus LifeSci Biotech Products ETF

Following the LifeSci Biotechnology Products Index, the Virtus LifeSci Biotech Products ETF (NYSEARCA:BBP) tracks the performance of U.S.-listed biotechnology companies in the “product stage.” Stocks must earn a majority of revenue from research and development and/or marketing and sales of other novel drugs or other therapies.

Tech ETFs Biggest Gainers and Losers

Within the same sector, some ETFs perform worse than others due to overexposure to a particular stock that has severely tanked and vice versa. 

The expense ratio for these funds ranges from 0.08% to 1.25%. They also happen to be volatile due to the high risk/reward profile of the technology sector. 

Here are tech ETF investments — funds that were hit the most and least:

Premarket Tech ETFs

ETFs can be transacted before general market timing. Premarket runs from 4 a.m. to 9:30 a.m. ET. This activity has limited volume and liquidity, so large bid-ask spreads are prevalent. 

Aftermarket Tech ETFs

ETFs can also be transacted after the general market timings. Aftermarket is open 4 p.m. to 8 p.m. ET. In the aftermarket, there is less trade volume and large bid-ask spreads — which implies higher volatility. You can expect short-term profits by purchasing during the aftermarket.

Why Invest in Tech ETFs?

Tech ETFs are closed-ended mutual funds traded on exchanges that invest in companies within the technology sector. The key advantages of investing in a sector through an ETF are low ticket size, diversification and tax efficiency compared to open-ended mutual funds and other asset classes.

There are 5 practical reasons why you should consider investing in technology ETFs:

• Lower risk through diversification: Investing directly in individual stocks could lead to concentration risk. Investing in tech ETFs can give you exposure to a well-performing and diversified set of tech stocks. Investment professionals skillfully handpick a range of stocks, which ensures that your eggs are in different baskets.
• Easy liquidity: Tech ETFs trade on the exchanges, so they can be bought and sold during market hours. Unlike individual stocks, the volume of buyers and sellers does not tend to dry up while trading in ETFs.
• Extremely low maintenance: If you invest directly, constant monitoring and analysis of the stocks in the respective fields can take a lot of time and effort. ETFs have dedicated fund managers and research analysts to do that work for you.
• Lower fees compared to mutual funds: Every professional fund manager charges a certain fee to manage your funds. This commission can sometimes run you dry, especially if you haven’t accounted for this hidden investment. There’s a stark difference in the cost of ETFs compared to mutual funds. The expense ratios for ETFs range from 1.10% to 1.25% of the fund’s earnings. 
• Ideal for investing in small amounts: If you’re a young investor or completely new to investing, it’s ideal to start small. Investing in ETFs lets you spend as little as the price of 1 share — similar to penny stocks. This makes ETF investments accessible to the average wage earner.

Best Online Brokers for Tech ETFs

We’ve shortlisted a list of few quality online brokers ready to help you invest and trade in tech ETFs.

Read Review

Commissions

$0 $6.95 for OTC Stocks

Account Minimum

$0

Get started securely through TD Ameritrade’s website

More Details

Commissions

$0 $6.95 for OTC Stocks

Account Minimum

$0

1 Minute Review

This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.

Best For

• Novice investors
• Retirement savers
• Day traders

Pros

• World-class trading platforms
• Detailed research reports and Education Center
• Assets ranging from stocks and ETFs to derivatives like futures and options

Cons

• Thinkorswim can be overwhelming to inexperienced traders
• Derivatives trading more costly than some competitors
• Expensive margin rates

Read Review

Commissions

$0

Account Minimum

$0

Get started securely through Webull’s website

More Details

Commissions

$0

Account Minimum

$0

1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For

• Active traders
• Intermediate traders
• Advanced traders

Pros

• Commission-free trading in over 5,000 different stocks and ETFs
• No account maintenance fees or software platform fees
• No charges to open and maintain an account
• Leverage of 4:1 on margin trades made the same day and leverage of 2:1 on trades held overnight
• Intuitive trading platform with technical and fundamental analysis tools

Cons

• Does not support trading in options, mutual funds, bonds or OTC stocks

Read Review

Commissions

$0 per trade

Account Minimum

$0 to open an account

Get started securely through Robinhood’s website

More Details

Commissions

$0 per trade

Account Minimum

$0 to open an account

1 Minute Review

Robinhood is the broker for traders who want a simple, easy-to-understand layout without all the bells and whistles other brokers offer. Though its trading options and account types are limited, even an absolute beginner can quickly master Robinhood’s intuitive and streamlined platform. On the other hand, more advanced traders might be frustrated by Robinhood’s lack of technical analysis tools, a feature that’s now nearly universal across other platforms.

Best For

• Beginner traders
• Mobile traders

Pros

• Streamlined, easy-to-understand interface
• Mobile app with full capabilities
• Can buy and sell cryptocurrency

Cons

• Almost no trading analysis tools available
• Only taxable brokerage accounts available
• No option to open a retirement account
• No access to mutual funds, forex or futures trading
• Limited customer service

Reaping the Benefits of Tech ETFs

Investing in tech ETFs is already a step in the right direction if you’re hoping to profit from the booming technology sector.

Instant diversification and low fees make tech ETFs ideal for first-time investors or seasoned pros interested in the tech sector as opposed to specific companies. Connect with one of our recommended brokers to invest in tech ETFs today.