Unless you’re heavily invested in some of the hot semiconductor stocks or the more magnificent members of the Magnificent Seven (perhaps soon to be called the Fantastic Four), odds are you may be trailing the S&P 500 and Nasdaq 100 on a year-to-date basis. Indeed, it’s nothing to beat yourself up over. Instead, it may be an opportunity to re-evaluate your portfolio’s overall exposure. If you’re like many investors sitting out the market’s run, you may be missing high-tech ETFs to watch.
Undoubtedly, tech valuations are getting frothy, depending on where you look. Regardless, the following slate of high-tech ETFs is a great starting point for investors who want broader (or narrower) exposure to the most exciting parts of the tech industry. Of course, the odd correction will happen eventually, so be ready to average down when the opportunity comes. Let’s look at three high-tech ETFs closely in the coming weeks as earnings season wraps up.
iShares Semiconductor ETF (SOXX)
The iShares Semiconductor ETF (NASDAQ:SOXX) has exploded, with a jarring 21% gain enjoyed year to date. Undoubtedly, The Big Short’s Michael Burry was wise to close his bold bet — to $47.4 million — against the SOXX ETF in the fourth quarter of last year, right ahead of the 2024 pop. Indeed, even the greatest investment minds can be wrong from time to time.
Indeed, the valuations of various semiconductor stocks have been suspect by some value investors for quite some time. Though the SOXX and its constituents are arguably more overvalued than they were when Burry set his sights on the ETF last year, a case could also be made that the cohort has become cheaper. How? Look no further than the latest round of earnings results of Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO), three of the largest holdings in the SOXX. Each firm continues to impress, and though expectations will eventually fall flat, there are no signs that the time will come anytime soon.
My take? I’d much rather be in the names than bet against them as they look to add to their recent strength amid the ongoing AI chip boom.
ARK Innovation Fund (ARKK)
ARK Innovation Fund (NYSEARCA:ARKK) has sat out the year-to-date boom in the Nasdaq from the sidelines, sinking around 3% year to date. This latest round of underperformance has got to weigh on investors’ patience. Reportedly, investors have been taking their money out of Cathie Wood’s flagship fund amid lackluster results from some of its top holdings.
Tesla (NASDAQ:TSLA) stock is no longer magnificent, so says Jim Cramer and many traders who are still rushing for the exits. As for the other constituents, some are under considerable amounts of pressure, including Roku (NASDAQ:ROKU), which got walloped following the Walmart (NYSE:WMT) acquisition of Vizio (NASDAQ:VZIO).
Indeed, it’s hard to stick with Cathie after the latest hailstorm hitting her ARKK fund. I don’t blame the investors who are jumping ship, either. It will be interesting to see how the last batch of Cathie Wood stocks hold up as earnings season ends. We have UIPath (NASDAQ:PATH), with results due on March 13, 2024, at the close.
Invesco QQQ Trust (QQQ)
Finally, we have the Invesco QQQ Trust (NASDAQ:QQQ) or triple Q’s, which is probably the best ETF of the batch for investors who don’t want to concentrate their exposure to the “spiciest” parts of the technology sector. Additionally, the QQQ ETF has continued to outpace the seemingly riskier ARKK ETF despite its concentration in the so-called Magnificent Seven members.
While not all Magnificent Seven members have been magnificent. Certainly not Tesla or Apple (NASDAQ:AAPL), I do think the QQQ ETF remains a go-to play for investors lacking in tech exposure. It’s not just tech you’ll get from the QQQ, though, as it also provides a good amount of exposure to the consumer discretionary sector.
As the semiconductor and AI stocks continue heating up, the QQQ will be interesting to watch as we head toward the end of the first quarter. Undoubtedly, I expect pundit calls for corrections to grow louder with every new high the tech-heavy group makes. Though a tad lofty, I simply do not see the same “bubbliness” there was to be had back in the late-1990s.
On the date of publication, Joey Frenette held shares in Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
