Thawatchai Chawong
What are the best tech ETFs for investors these days?
Seeking Alpha analysts Hunting Alpha, Dr. Christopher Davis of Quad 7 and Oakoff Investments gave us their picks.
Hunting Alpha: Today, AI is changing how things are done in the world at a rapid pace. I believe there is no undue hype on this theme. A decade from now, the same will probably be said about quantum computing. But currently, individual quantum computing stocks such as IONQ (NYSE:IONQ), D-Wave Quantum (NYSE:QBTS), Rigetti Computing (NASDAQ:RGTI) and Quantum Computing (NASDAQ:QUBT) do look overhyped as they are trading at extremely high valuations with limited scale and traction on revenues and earnings numbers.
That’s why I like the Defiance Quantum ETF (NASDAQ:QTUM). This is a safer bet on the quantum theme as it is more diversified, holding other tech leaders that I am very bullish on, such as Palantir (NASDAQ:PLTR). Cybersecurity is another megatrend that I am excited about. The First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) is a good way to get broad exposure to this theme.
Dr. Christopher Davis of Quad 7: There are a lot of ETFs that track all manner of tech. So, it really depends on what sector you want allocations to. If you want the Nasdaq 100, which is a pretty decent basket for easy exposure, look no further than the Invesco QQQ Trust ETF(NASDAQ:QQQ). Very easy. But if you want to get specialized exposure, there are just so many to choose from.
We actually like cybersecurity as a niche tech play and have had our members in The First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR), which just hit a 52-week high.
Oakoff Investments: The first thing that comes to mind is Invesco QQQ Trust ETF (NASDAQ:QQQ), as over the past five years, it delivered 132.83% vs. SPY’s (NYSEARCA:SPY) 108.64% (total returns in both cases, based on Seeking Alpha data).
I think it doesn’t make much sense to reinvent the wheel here, but there’s one option to potentially lower one’s expenses on holding for the long term. There’s an ETF called Invesco NASDAQ 100 ETF (NASDAQ:QQQM), which has an identical holding structure, but it charges less in management expenses (0.15% vs QQQ’s 0.2%).
QQQM was launched by the same Invesco as you can see, but it has a shorter track record (launched in 2020 vs. QQQ’s launch year of 1999) and it’s 6-7 times smaller in terms of AUM. But for the past 3 years, QQQM’s total return outpaced QQQ’s by 25 bps, based on Seeking Alpha data. When we talk about millions invested, I think this becomes a great difference, so I’m picking QQQM.