>>> Forget IBM, Buy These Thematic Tech ETFs Instead
April 20, 2017 https://finance.yahoo.com/news/forget-ibm-buy-thematic-tech-150003029.html
International Business Machines Corporation (IBM) witnessed year-over-year revenue decline for the 20th time in a row with its Q1 results. The company’s earnings per share came in at $2.38, beating the Zacks Consensus Estimate of $2.34.
Its revenues of $18.2 billion, however, fell short of $18.494 billion and declined 3% year over year. The company's shares slid over 5% after hours, as per CNBC. IBM is up 2.5% so far this year (as of April 18, 2017).
So, what should investors do now? Should they take cues from IBM’s lackluster revenue numbers and get all disappointed about the broader tech sector or look out for tech ETFs that have the potential to outperform ahead. One thing is clear from IBM’s results –– the company has been transiting toward better growth areas “like cloud, analytics, mobility and security.”
In this vein, below we highlight a few thematic tech ETFs that could benefit investors over the long term.
ETFs in Focus First Trust ISE Cloud Computing Index Fund SKYY
IBM’s results only drive us to land on a cloud computing ETF. Amid subdued revenue performance, IBM registered a 33% year-over-year rise in cloud computing sales. This fund provides exposure to cloud computing securities by tracking the ISE Cloud Computing Index. Holding about 30 stocks, it is pretty well spread out across components with none holding more than 5.01% of assets. Software firms dominate this ETF, accounting for about 40% share. It has 0.60% in expense ratio and has gained 11% so far this year. Global X FinTech ETF FINX
Financial technology or “FinTech” is gaining immense popularity courtesy of increased usage of technology in financial transactions. Initially, FinTech was restricted to certain areas like payment processes. But it has now widened to include several other applications in the financial sector.
Mobile banking, mobile trading on commodities exchanges and digital wallets are examples of technological applications in the financial space, as per investopedia. IBM’s result also reinforces the rise of mobile practices (read: Fintech ETFs Head to Head: FINQ vs. FINX).
The top three holdings of FINX are First Data (6.47%), Temenos Group Ag-Reg (6.35%) and SS&C Technologies Holding (6.11%). The 29-stock fund puts about 42% weight in the data processing & outsourced services while application software (35.5%) and Internet software & services (6.8%) round out the next two spots. The U.S. has about 69.6% exposure to the fund followed by Germany (7.28%) and Switzerland (7.28%). Growth stocks account for about 72% of the fund. The fund charges 68 bps in fees and is up 11.2% in the year-to-date frame (as of April 18, 2017).
PureFunds ISE Big Data ETF BIGD
The fund focuses on another soaring area of big data and analytics industry. The 41-stock fund doesn’t put more than 3.40% of weight in one stock. It charges 75 bps in fees. The fund is up 7.5% so far this year (as of April 18, 2017). Robo Global Robotics&Automation ETF ROBO
The robotics industry is also poised to grow at an exponential rate in the coming days. Holding about 85 stocks in its portfolio, the fund maintains a diversified portfolio with only 1.831% of its assets invested in the top company. The fund mostly invests in companies from the U.S. (43%) and Japan (25%). The fund is multi-cap in nature, with a tilt toward smaller capitalization. It has an expense ratio of 0.95%. ROBO is up 10% so far this year (as of April 18, 2017) (read: What Investors Need to Know about Robotics ETFs). The 3D Printing ETF PRNT
3D Printing technology investing has lately become one of the most talked-about topics. Several analysts offered bullish growth projections for this industry. McKinsey projects the 3D printing market to grow from $4 billion in 2014 to between $180 billion and $490 billion by 2025. Gartner Research sees more-than-double 3D printer shipments between 2016 and 2019. Most importantly, the space is still at a nascent stage and thus has room for upside.
No stock accounts for 6.67% of the 42-stock fund. It is up 6.6% in the year-to-date frame (read: 3D Printing ETF: A Good Long-Term Pick?).