A Basket of Tech Moneymakers
Jan 17th 2013 9:33PM
Updated Jan 18th 2013 8:20AM
Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some technology-heavy stocks to your portfolio, the iShares Dow Jones US Technology ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47 %.
This ETF has outperformed the world market over the past three, five, and 10 years, though just barely over the past 10. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 6% , this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
Our growing world population will demand more and better high-tech products and services over time, boosting the business of successful technology-oriented companies.
More than a handful of technology-oriented companies had strong performances over the past year. Motorola Solutions , for example, surged 26%, deriving a lot of its revenue from government contracts and networking technology, among other things. It's moving deeper into supply chain management via a purchase of British handheld terminal device maker Psion.
Broadcom gained 9%. It has been making some smart acquisitions that can boost its presence in mobile computing, while going after the Chinese smartphone market, as well. Its products are also found in many iDevices, which should fatten its coffers, though recent reports of softer-than-expected sales there might hurt it. Its lower-cost chips might serve it well against some competitors, though, as efforts are made to push lower-cost phones into developing economies such as China.
Semiconductor fabrication equipment maker Applied Materials rose 5%. It's in a very cyclical business, and has lowered its outlook recently. Meanwhile, it's planning to buy back billions of dollars of its own shares, and patient investors can collect a 3.1% dividend yield at what seems like an appealing entry price.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Corning , which has long specialized in glass, is very much a high-tech company, producing glass for LCD displays and smartphones , and fiber for telecom networks, among other things. Demand for its Gorilla Glass is strong, and its flexible new Willow Glass is also promising. Also boding well is an expected uptick in TV sales. The stock's valuation looks attractive, too.
The big picture
Demand for technology isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
With the explosive growth of smartphones worldwide, many investors thought they would ride Corning's dominant cover glass to massive investment returns. That hasn't played out yet, as mobile growth has failed to offset declines in the company's core business. In this brand new premium research report on Corning, our analyst walks through the business, as well as the key opportunities and risks facing it today. Click here to claim your copy, and receive a full year of updates as key events unfold.
The article A Basket of Tech Moneymakers originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Corning. The Motley Fool recommends Corning. The Motley Fool owns shares of Corning. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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