U.S. tech stocks have been hitting rough weather this year as surging inflation has been weighing on their lofty valuations caused by massive policy easing since the COVID-19 outbreak. Although tech stocks tried to recoup losses several times, investors remained cautious about betting big on growth stocks.
Rising rate worries dampened the appeal of the stocks that rely on easy borrowing for superior growth. Hence, shares of high-growth technology companies remain in a tight spot. As a result, the largest tech ETF Technology Select Sector SPDR Fund XLK has lost 26.6% this year (as of Dec 21, 2022).
Among the group of mega-cap companies, Amazon is down about 44% this year. Google parent Alphabet and Facebook parent Meta have declined about 38.2% and 65%, respectively. All three companies are on a cost-cutting mode thanks to waning consumer demand, subdued ad spending, and inflationary pressure on wages and products.
Growth expectations for tech earnings are also muted.Across the tech industry, there have been total headcount cuts of more than 130,000, according to Levels.fyi, as quoted on CNBC.
Against this backdrop, below, we highlight a few winning and losing technology ETFs of this year. We can see that tech ETFs with dividend exposure have won this year while cryptocurrencies have lost. Bitcoin and Ethereum are down more than 50% from their all-time highs in late 2021 due to the prevalence of risk-off sentiments in 2022.
Winners
ProShares S&P Technology Dividend Aristocrats ETF TDV – Down 16.1%
The underlying S&P Technology Dividend Aristocrats Index targets companies from information technology, Internet and direct marketing retail, interactive home entertainment, and interactive media and services segments of the economy. The fund charges 45 bps in fees.
SPDR S&P Kensho Future Security ETF FITE – Down 18.1%
The underlying S&P Kensho Future Security Index comprises U.S.-listed equity securities of companies domiciled across developed and emerging markets worldwide that are in the Future Security sector. The fund charges 45 bps in fees (read: ETF Winners Amid Tech’s Roller-Coaster Ride in a Year).
First Trust NASDAQ Technology Dividend Index Fund TDIV – Down 22.5%
It is the only ETF focusing on the S&P Technology Dividend Aristocrats — well-established, technology-related companies that have consistently hiked their dividends for at least seven years. Data Processing & Outsourced Services (23%) and Semiconductors (18.54%) are two different industries. The fund charges 45 bps in fees.
Losers
Viridi Bitcoin Miners ETF RIGZ – Down 56.2%
Viridi Bitcoin Miners ETF is an actively managed exchange-traded fund focused on the cryptocurrency mining industry. The fund charges 90 bps in fees.
VanEck Digital Transformation ETF DAPP – Down 85.1%
The underlying MVIS Global Digital Assets Equity Index is a rules-based, modified capitalization weighted, float-adjusted index intended to give investors a means of tracking the overall performance of the global digital asset segment. The fund charges 50 bps in fees.
Global X Blockchain ETF BKCH – Down 84.33%
The underlying Solactive Blockchain Index provides exposure to companies that are positioned to benefit from further advances in the field of blockchain technology. The fund charges 50 bps in fees.
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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
Global X Blockchain ETF (BKCH): ETF Research Reports
SPDR S&P Kensho Future Security ETF (FITE): ETF Research Reports
ProShares S&P Technology Dividend Aristocrats ETF (TDV): ETF Research Reports
VanEck Digital Transformation ETF (DAPP): ETF Research Reports
Viridi Bitcoin Miners ETF (RIGZ): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.