Top tech sector ETFs scored double-digit gains this year through March 21 (see table). Though most suffered big losses during Thursday and Friday’s market rout, they still outperform the S&P 500 by a wide margin. Following those sessions, the ETFs making the list still held year-to-date gains ranging from 5% to 10%. The S&P 500, meantime, fell 3%.
A familiar name, ARK Web x.0 (ARKW), led with a 16.7% YTD return as of March 21, according to Morningstar Direct. After the close Friday, its 10% gain was tied with two other funds including First Trust Dow Jones Internet (FDN). The $495 million ARK fund, launched in September 2014, invests in companies expected to benefit as technology shifts to the cloud.
Cloud computing and cybersecurity accounted for 22% of assets, e-commerce 21%, and big data and machine learning 19%. Its top 10 holdings as of March 22 included Amazon, Netflix (NFLX), graphics chip designer and artificial intelligence play Nvidia, and Apple (AAPL). Apple shed more than 7% for the week to drop below its 50-day line.
The top 10 names represented 43% of the 44-stock portfolio. The actively managed fund has a solid track record with a three-year average annual return of 35.9% vs. 11.1% for the S&P 500.
ARKW shares are now trying to hold support near the 50-day moving average. A solid rebound above the line could set up a buy opportunity, but all purchases are at higher risk than usual with the market uptrend under pressure.
First Trust Dow Jones Internet, up 15.9% through March 21, also held a 10% gain after Friday. Shares are testing their 50-day line. The $7 billion fund, which tracks the Dow Jones Internet Composite Index, held Amazon, Facebook (FB) and Netflix among its top holdings. Facebook crashed below its 200-day line last week amid fallout from the Cambridge Analytica data leak scandal.
ARK Innovation (ARKK) tied the two funds with a 10% YTD gain through Friday. IShares North American Tech-Software (IGV) was next with a 9% gain after the sell-off. Through March 21, the two funds had gained 15.1% and 14.4%, respectively. ARKK, which declined in eight of the past nine sessions, slid below its 50-day line. IGV also slipped below the support line.
Friday’s pick, Utilities Select Sector SPDR (XLU), reversed along with the broader market Friday to close below its 50-day line.
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