The technology sector has seen pretty choppy earnings reports come in, with some companies surging higher, and others falling by the wayside. Once reliable names (such as Microsoft) have been struggling though, suggesting that new leadership is at hand in the tech sector.
In particular, investors have seen a great deal of health in the internet, mobile, and broad social media markets. These corners of the tech world have posted solid earnings, almost universally, and have seen soaring stock prices as a result.
Plus, the outlook for many firms in this corner of the market is impressive, as a number of analysts have raised their estimates for companies in the sector. In fact, at time of writing, six of the seven Zacks Industries that are classified as being in the internet have Zacks Ranks in the top 50%, suggesting that good trading could be ahead for this space in the weeks ahead as well.
How to Play
While a look to individual securities could be a way to play this trend, investors may want to consider internet ETFs instead. This technique allows for diversification across a number of names, so that you can still play the trend without worrying about one company blowing up the entire return profile (see Create a Diversified Portfolio Using ETFs).
Below, we highlight three such internet ETFs which could make for interesting plays in this type of environment, especially if current trends continue in the space:
PowerShares NASDAQ Internet Portfolio (PNQI)
This ETF tracks the Nasdaq Internet Index a benchmark of about 80 companies in the internet segment of the economy. The product is somewhat popular with investors as it has about $100 million in assets, though volume is a little light at around 20,000 shares a day.
Internet and mobile makes up about 70% of the portfolio, while ‘internet retail’ 30% make up the rest of the fund. Large caps do account for roughly half the assets, while growth stocks account for roughly 75% of PNQI.
Top holdings include the surging Facebook (FB), priceline.com (PCLN), and Amazon.com (AMZN). The top holdings do account for an outsized portion of the assets though, as nearly 40% of the fund goes to the top five holdings alone (read 3 ETFs in Focus on Facebook’s Earnings Beat).
First Trust Dow Jones Internet Index (FDN)
This fund follows the Dow Jones Internet Index, a cap weighted benchmark of internet companies based in the U.S. market. FDN is pretty popular with investors, as over $1.3 billion is invested in the product while average daily volume is over 160,000 shares a day.
The Internet and mobile segment accounts for roughly half the portfolio, followed closely by internet retail at 23% of assets. The rest of the portfolio is in a variety of related industries including software, communications, among others.(...)Click here to continue reading the original ETFDailyNews.com article: Three ETFs To Play On Positive Trends In The Internet SpaceYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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