Thanks to Artificial Intelligence (AI), which is spreading like wildfire, and the increasing global dependence on technology, the technology sector is off to a strong start in 2024. The Nasdaq-100 Technology Sector Index has risen nearly 10% year-to-date and 37% over the past year.
As a result, the time looks ripe to invest in top-performing tech ETFs Robo Global Robotics and Automation Index ETF (ROBO), Global X Robotics & Artificial Intelligence ETF (BOTZ), and First Trust Cloud Computing ETF (SKYY), which are poised to skyrocket. These funds are rated A (Strong Buy) in our proprietary POWR Ratings system.
Before delving deeper into the fundamentals of these ETFs, let’s look at what’s happening in the technology industry.
Artificial Intelligence (AI) is rapidly transforming business operations through advanced automation, intelligent recognition, and in-depth analysis. OpenAI’s ChatGPT has become a game-changer in the tech world, redefining how we work and interact with technology.
With the release of GPT-4o, which integrates audio, vision, and text, the company is poised for another breakthrough year. Moreover, ChatGPT’s user base has surged to over 180.5 million, an 80% increase from 100 million in January 2023.
The AI boom is driving a wave of investment and innovation across the sector. Meanwhile, the expansion of AI applications is opening up vast new opportunities for growth within the sector. According to Grand View Research, the global AI market is projected to grow at a CAGR of 36.6% (from 2024 to 2030), reaching $1.81 trillion by 2030.
Moreover, the tech sector is poised to benefit from anticipated rate cuts this year. Lower interest rates make borrowing cheaper, fueling growth initiatives in the tech industry, which heavily relies on financing for expansion.
In uncertain markets, Exchange-Traded Funds (ETFs) offer a compelling option for investors seeking exposure to the tech sector while mitigating risk. Tech ETFs provide diversification by covering a range of securities, offering the potential for high returns at a lower price point compared to individual stock investments. Furthermore, the diversification offered by ETFs can help investors safeguard against risk, providing a buffer against market volatility.
Considering these favorable trends, let’s look at the fundamentals of the best Technologies Equities ETFs, beginning with the third choice.
ETF #3: Robo Global Robotics and Automation Index ETF (ROBO)
ROBO tracks a global index of companies that are driving transformative innovations in robotics, automation, and artificial intelligence (RAAI), such as companies that create technology to enable intelligent systems that can sense, process, and act and companies that apply those technologies to deliver RAAI-enabled products. It seeks to track the performance of the ROBO Global Robotics and Automation TR Index.
With $1.27 billion in AUM, ROBO’s top holdings include Teradyne, Inc. (TER) with a 2.23% weighting, followed by Zebra Technologies Corporation (ZBRA) at 1.96%, and Kardex Holding AG and Intuitive Surgical, Inc. (ISRG), at 1.91% and 1.86%, respectively. It currently has 78 holdings in total.
Over the past five days, ROBO’s fund outflows were $11.44 million, and $21.13 million over the past month. In addition, its 0.95% expense ratio compares to the 0.65% category average. The ETF’s NAV was $56.63 as of May 23, 2024. The fund has gained 9.1% over the past six months and 5.9% over the past year to close the last trading session at $56.76. It has a beta of 1.42.
ROBO’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ROBO has a grade A for Trade and Buy & Hold. The fund is ranked #22 out of 119 ETFs in the A-rated Technologies Equities ETFs group. Click here to see all the ROBO ratings.
ETF #2: Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ seeks to provide market-cap-selected and weighted exposure to companies likely to benefit from the growing adoption and utilization of robotics and artificial intelligence, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles. It tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index.
The fund has a total of 44 holdings. Its top holdings include NVIDIA Corporation (NVDA) with a 10.45% weighting, ABB Ltd. at 9.24%, followed by Intuitive Surgical, Inc. (ISRG) and Keyence Corporation with 8.24% and 7.90% weightings, respectively.
The fund has an expense ratio of 0.68% compares to the category average of 0.65%. Over the past three months, BOTZ’s fund inflows came in at $120.70 million, and $428.41 million over the past year. Also, the ETF has a beta of 1.50.
BOTZ has gained 22.9% over the past nine months and 20.6% over the past year to close the last trading session at $31.53. As of May 24, 2024, BOTZ had assets under management (AUM) of $2.76 billion and an NAV of $31.46.
BOTZ’s POWR Ratings reflect solid prospects. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
BOTZ has an A grade for Trade and Buy & Hold. Of the 119 ETFs in the Technology Equities ETFs group, it is ranked #16.
Beyond what we stated above, we have also given BOTZ a grade for Peer. Get all BOTZ ratings here.
ETF #1: First Trust Cloud Computing ETF (SKYY)
Launched and managed by First Trust Advisors L.P., SKYY invests in global public equity markets. It also invests in the growth and value stocks of companies across diversified market capitalizations. In addition, the fund seeks to track the performance of the ISE CTA Cloud Computing Index by using a full replication technique.
As of May 24, SKYY had $3.04 billion in assets under management (AUM) and an NAV of $95.01. Its expense ratio of 0.60% compares to the category average of 0.58%. Also, it has a beta of 1.13.
The fund’s top holdings include Alphabet Inc. (GOOGL), with a 4.75% weight, Pure Storage, Inc. (PSTG), with a 4.36% weight, Nutanix, Inc. (NTNX), with a 4.33% weight, and Arista Networks, Inc. (ANET), with a 4.15% weight. It has a total of 66 holdings.
Over the past month, the fund’s net outflow came in at $27.90 million. SKYY has gained 25.2% over the past nine months and 39.8% over the past year to close the last trading session at $95.02.
It’s no surprise that SKYY has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Trade and Buy & Hold.
SKYY is ranked #15 in the same Technology Equities ETFs group. Click here to access SKYY’s Peer grade as well.
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SKYY shares were trading at $94.94 per share on Tuesday afternoon, down $0.08 (-0.08%). Year-to-date, SKYY has gained 8.29%, versus a 11.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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