10 Best-Performing Technology ETFs in 2022
In this article, we will discuss the 10 best performing technology ETFs in 2022. If you want to explore similar ETFs, you can take a look at 5 Best-Performing Technology ETFs in 2022.
Tech has lagged all year round in 2022, with the Nasdaq tumbling 29.62% year to date as of December 12. Tech stocks have been the victim of high interest rates, high inflation, and huge sell-offs. Investors have restructured their portfolios towards value and more defensive sectors to hedge against inflation and interest rate hikes.
"2022 is a Year to Forget For Tech"
On December 6, Jefferies analyst Brent Thill appeared in an interview on Yahoo Finance Live where he discussed his overview and outlook for the tech sector. Thill noted that 2022 has been a rough year for tech stocks and he sees further downside as we head into the first half of 2023. Here are some comments from Thill:
"We're facing a recession, Jefferies global strategists and economists believe that there is no way we can hit a soft landing. So fasten your seat belts, it's going to be a hard landing. It's going to take time for the industry to recover. What, right now, I think what's happening is many of these companies have over forecasted on the top line and that's not coming in. And now, they're having to cut expenses, they're having to cut on employees, they're actually slowing their hiring, and this is going to last into the front half of '23."
Brent Thill further said that "stocks look ahead" and so "the next signpost will probably be some time mid-next year in '23". Thill noted that "as tech investors look at '24 numbers, we will start to see hopefully numbers reaccelerate into '24". Brent Thill expects a further 10% to 20% downside from current levels, after which we will have "the all-clear sign, as we can look at '24 and we can look at a potential re-acceleration" in tech.
While tech stocks are getting hammered, investors can still increase their exposure to tech in a relatively less-risky way. Investing in technology exchange-traded funds (ETFs) is a great way to gain exposure to the technology sector in a diversified, low-cost and tax-efficient manner. Technology ETFs offer investors a way to gain broad exposure to the technology sector, including technology hardware, software, semiconductors, communications and internet-related industries.
Investing in technology ETFs can help tech investors gain exposure to big-tech in a risk-efficient manner due to the diversification and low-cost structure ETFs offer. Some of the best-in-class names investors can gain exposure to via technology ETFs include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG). This piece will focus on the best performing technology ETFs in 2022.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
We screened for technology ETFs and reviewed their year-to-date returns, as of December 12. We picked the best performing ETFs from among them and ranked them in increasing order of their year-to-date returns. Even though these ETFs have lost value year to date, they have outperformed the tech-heavy Nasdaq Composite, which we have used as a benchmark for this piece. Along with each ETF, we have mentioned the underlying index it tracks, the technique used, its portfolio breakdown, and top holdings.
Best Performing Technology ETFs in 2022
10. iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK)
YTD Return as of December 12: -23.38%
The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) employs a representative sampling technique to mirror the performance of the NYSE FactSet Global Cyber Security Index. The fund has $520 million in assets under management and an expense ratio of 0.47%. The fund has lost 23.38% year to date, as of December 12, and has outperformed the Nasdaq by over 5%. The fund is therefore placed among the best performing technology ETFs in 2022.
The iShares Cybersecurity and Tech ETF (NYSEARCA:IHAK) has 56 holdings concentrated in the technology and industrials segments. The fund has a top ten holdings concentration of 49.28%. One of the fund's top ten holdings is Zscaler, Inc. (NASDAQ:ZS), a cloud security company worth $17.47 billion as of December 9.
On December 2, MKM Partners analyst Catharine Trebnick revised her price target on Zscaler, Inc. (NASDAQ:ZS) to $180 from $190 and reiterated a Buy rating on the shares.
As of September 30, D E Shaw is the top investor in Zscaler, Inc. (NASDAQ:ZS) and has stakes worth $189.90 million.
Here is what Artisan Partners had to say about Zscaler, Inc. (NASDAQ:ZS) in its third-quarter 2022 investor letter:
“Our notable adds in the quarter included Zscaler, Inc. (NASDAQ:ZS) , Etsy and BioNTech. Zscaler provides cloud-based Internet security solutions. The company recently delivered 61% revenue growth and expects to grow nearly 40% in 2023 (ahead of expectations). Despite solid fundamental momentum, shares have underperformed this year as investors have grown concerned about slowing demand for enterprise software as the broader global economy slows. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments alike as cyberattacks can have devastating financial and reputational consequences. From 2018 to 2020, losses from cybercrimes grew 67% to $1 trillion, and some estimate it could reach $10 trillion by 2025. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (Office 365, Salesforce, etc.) and a more remote workforce (versus pre-pandemic) make operating IT infrastructures increasingly complex. Zscaler’s scalable, cloud-based security platform is a more secure and efficient way to connect users and applications, which eliminates the need for several layers of security (firewalls, VPNs, etc.) developed and built over the last couple of decades. For these reasons and with shares trading at an attractive discount to our PMV estimate, we added to our position.”
Like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Zscaler, Inc. (NASDAQ:ZS) is rising in popularity among elite money managers.
9. VanEck Israel ETF (NYSEARCA:ISRA)
YTD Return as of December 12: -22.49%
The VanEck Vectors Israel ETF (NYSEARCA:ISRA) has fallen by roughly 22.5% year to date, as of December 12, but is one of the best performing technology ETFs in 2022 since it has outperformed the Nasdaq by over 6%. The fund mirrors the returns of the BlueStar Israel Global Index by employing a full replication technique. The fund has $63.69 million in assets under management.
The VanEck Vectors Israel ETF (NYSEARCA:ISRA) has a trailing twelve-month yield of 1.65% and an expense ratio of 0.59%. The fund pays out dividends annually. The fund has 112 holdings, concentrated in the technology, financials, and healthcare segments, and has a top ten holdings concentration of 49%.
Among the top ten holdings of The VanEck Israel ETF (NYSEARCA:ISRA), we have SolarEdge Technologies, Inc. (NASDAQ:SEDG). As of September 30, Impax Asset Management is the top investor in SolarEdge Technologies, Inc. (NASDAQ:SEDG) and has stakes of over $126 million in the company.
This December, BofA analyst Julien Dumoulin-Smith upgraded SolarEdge Technologies, Inc. (NASDAQ:SEDG) to Buy from Neutral and raised his price target to $367 from $269.
Here is what ClearBridge Investments had to say about SolarEdge Technologies, Inc. (NASDAQ:SEDG) in its second-quarter 2022 investor letter:
“We are well-positioned to participate in the accelerating energy transition. High and rising utility costs combined with policy support are driving increased penetration of home solar plus storage systems in Europe. Israel-based SolarEdge Technologies (NASDAQ:SEDG) expects to see significant growth in solar installations in this market led by Germany and Italy, among others, where consumers are not only demanding solar on the roof but a complete system solution including batteries. This phenomenon is accelerating revenue growth for these companies.”
8. Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT)
YTD Return as of December 12: -21.46%
The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) aims to mirror the performance of the S&P 500 Equal Weight Information Technology Index by using a full replication technique. As of December 12, the fund has lost 21.46% year to date, outperforming the Nasdaq by over 8%. The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) is one of the best performing technology ETFs in 2022.
The Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT) has a n expense ratio of 0.40% and is yielding 0.65%. The fund's assets under management sit at $2.14 billion. The fund has 77 holdings, concentrated in technology and industrials, and has a top ten holdings concentration of 15.34%.
International Business Machines Corporation (NYSE:IBM) is one of the top holdings of the Invesco S&P 500 Equal Weight Technology ETF (NYSEARCA:RYT). This October, BofA analyst Wamsi Mohan updated his price target on International Business Machines Corporation (NYSE:IBM) to $145 from $155 and reiterated a Buy rating on the shares.
As of September 30, Arrowstreet Capital is the top stockholder in International Business Machines Corporation (NYSE:IBM) and has disclosed a position worth $515.7 million.
7. Global X Internet of Things ETF (NASDAQ:SNSR)
YTD Return as of December 12: -21.44%
As of December 12, the Global X Internet of Things ETF (NASDAQ:SNSR) has lost 21.44% year to date and has outperformed the Nasdaq by over 8%. The fund is ranked high among the best performing technology ETFs in 2022. The fund has an expense ratio of 0.68% and has $305.70 million in assets under management. The fund aims to mirror the returns of the Indxx Global Internet of Things Thematic Index by using a full replication technique.
The Global X Internet of Things ETF (NASDAQ:SNSR) has 63 holdings and a top ten holdings concentration of 47.25%. The fund has investments concentrated in technology, industrials, and healthcare. One of the top holdings of the fund is Johnson Controls International plc (NYSE:JCI), a leading HVAC company. As of December 12, Johnson Controls International plc (NYSE:JCI) has gained 30.68% over the past six months and is valued at $45 billion on the open market.
On December 5, Deutsche Bank analyst Nicole Deblase raised her price target on Johnson Controls International plc (NYSE:JCI) to $74 from $70 and reiterated a Buy rating on the shares.
As of September 30, Citadel Investment Group is the top investor in Johnson Controls International plc (NYSE:JCI) and has a position worth $363.5 million in the company.
6. First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV)
YTD Return as of December 12: -19.48%
The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has $1.66 billion in assets under management and an expense ratio of 0.50%. The fund pays out dividends quarterly and is yielding 2.45%. The fund uses a full replication technique to mirror the performance of the NASDAQ Technology Dividend Index. As of December 12, the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has outperformed the Nasdaq by roughly 10% and has shed 19.48% year to date. The fund is ranked sixth among the best performing technology ETFs in 2022.
The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV) has 95 holdings concentrated across the technology and communications segments. The fund has a top ten holdings concentration of 57.75%. Intel Corporation (NASDAQ:INTC) is one of the most notable holdings of the First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV). As of December 12, Intel Corporation (NASDAQ:INTC) is trading at a PE ratio of 8.85 and is offering a dividend yield of 5.09%.
On November 22, Mizuho analyst Vijay Rakesh reinstated coverage of Intel Corporation (NASDAQ:INTC) with a Neutral rating and a $32 price target.
As of September 30, Two Sigma Advisors is the top investor in Intel Corporation (NASDAQ:INTC) and has disclosed a position worth $390.49 million in the company.
Here is what ClearBridge Investments had to say about Intel Corporation (NASDAQ:INTC) in its third-quarter 2022 investor letter:
“Also on the detractor side, Intel Corporation (NASDAQ:INTC) delivered a disappointing revenue miss and lowered full-year revenue and earnings guidance as COVID-19-driven demand for PCs abated (where Intel enjoys half its sales) and a delay in its flagship Sapphire Rapids CPU hurt its data center business. Despite these issues, we still believe Intel is an economically sensitive turnaround story with substantial upside.”
Risk-averse investors can manage risk by investing in technology ETFs and still getting exposure to leading tech companies include Intel Corporation (NASDAQ:INTC), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
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Disclosure: None. 10 Best-Performing Technology ETFs in 2022 is originally published on Insider Monkey.
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