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7 Disruptive Tech ETFs to Buy

Todd Shriber

Investors looking to future-ize their portfolios often turn to the technology sector and the related ETFs.

Traditional technology ETFs are usually home to the sector’s largest names, such as Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and others. There is nothing wrong with that strategy. After all, even large- and mega-cap tech companies are still innovating. Plus, investing in tech ETFs that focus on the sector’s biggest names can reduce some of the volatility associated with the sector.

For investors willing to take on a bit more risk in search of true disruption in the tech space, there are a slew of thematic tech ETFs that offer dedicated exposure to some of the most compelling tech themes; exposure that is hard to come by in traditional tech ETFs.

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Investors wanting to focus on tomorrow’s disruptive themes today, should consider the following disruptive tech ETFs, some of which are already delivering stellar performances.

ALPS Disruptive Technologies ETF (DTEC)

Expense ratio: 0.50% per year, or $50 on a $10,000 investment.

When it comes to disruptive tech, the ALPS Disruptive Technologies ETF (NYSEARCA:DTEC) is one of the best ETFs. DTEC’s status as one of the best tech ETFs for the disruptive trends of tomorrow is simple: this fund does not force investors to pick a specific niche or theme to focus.

Rather, DTEC equally weights 10 fast-growing themes, including 3D printing, big data, healthcare innovation, Internet of Things (IoT) and mobile payments, among others.

“Disruptive technologies are impacting our day to day lives dramatically, and are forcing industries to change the way they do business,” according to ALPS.

DTEC’s approach is working. Granted it does not sound like much, but this tech ETF is up 3.87% over the past year compared to 1.46% for the large- and mega-cap heavy Nasdaq-100 Index.

Global X Internet of Things ETF (SNSR)

 Expense ratio: 0.68% per year, or $68 on a $10,000 investment.

As noted above with DTEC, IoT is an important disruptive theme. It has already arrived, and few traditional tech ETFs offer adequate exposure to IoT’s explosive investment potential. For investors wanting a dedicated IoT play, the Global X Internet of Things ETF (NASDAQ:SNSR) is the tech ETF to buy.

SNSR, which debuted in September 2016, follows the Indxx Global Internet of Things Thematic Index. IoT “includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet,” according to Global X.

Up 16% this year, SNSR is knocking on the door of being one of 2019’s best-performing ETFs and there is plenty to like with this tech ETF.

“Forecasts expect 20.4 billion connected devices to be online by 2020 with $1.4 trillion in worldwide annual spending on IoT hardware, software and services by 2021,” according to Global X research.

ARK Fintech Innovation ETF (ARKF)

Expense ratio: 0.75% per year, or $75 on a $10,000 investment.

Barely more than a month old, the ARK Fintech Innovation ETF (NYSEARCA:ARKF) is one of the newest disruptive tech ETFs. The fund’s infant status should be a deterrent to investors, but data suggests it’s not as ARKF is already home to nearly $53 million in assets under management following its February 4 debut.

“In short order thanks to impressive investor demand and averaging more than 32,000 shares traded daily on average since the launch, the fund has already grown to be the fifth largest ETF in the ARK ETF family,” said Paul Weisbruch, head of ETF sales and trading at Dallas-based Esposito Securities, in a note out Tuesday.

ARKF is actively managed and is the second dedicated fintech ETF in the U.S. DTEC also has fintech exposure and there is a mobile payments ETF, so ARKF has some entrenched competition, but its fast start could be a sign of more positive things to come.

BlueStar Israel Technology ETF (ITEQ)

Expense ratio: 0.75% per year, or $75 on a $10,000 investment.

As its name implies, the BlueStar Israel Technology ETF (NYSEARCA:ITEQ) is an Israel fund and a tech ETF. This is a meaningful combination because Israel is one of the dominant forces on the global technology stage.

Technology is arguably the heartbeat of Israel’s economy as highlighted by a 30.63% tech weight in the MSCI Israel Capped Investable Market Index. The emphasis on tech is meaningful for ITEQ investors. Since inception, this tech ETF is higher by 48.50% (as of Feb. 28), beating the MSCI Israel Capped Investable Market Index by a margin of better than 4-to-1.

“ITEQ provides exposure to the technology themes of tomorrow(Including cyber security, autonomous driving, artificial intelligence, cleanTech, defenseTech, 3D printing),” according to the issuer.

Defiance Next Gen Connectivity ETF (FIVG)

 Expense ratio: 0.30% per year, or $30 on a $10,000 investment.

Having debuted earlier this month, the Defiance Next Gen Connectivity ETF (NYSEARCA:FIVG) is the first dedicated 5G and the newest tech ETF highlighted here.

The Defiance Next Gen Connectivity ETF is the first ETF to emphasize securities whose products and services are predominantly tied to the development of 5G networking and communication technologies,” according to a statement from Defiance ETFs.

Much like some of the other themes discussed here, 5G has disruptive traits and the potential to deliver big opportunity for investors due to its reach across multiple industries and themes.

“From smart care to augmented reality/virtual reality functions; from manufacturing to the automotive industry to medicine and healthcare, the impact of 5G could be felt across many spheres, including Enhanced MobileBroadband (EMBB), Massive Internet of Things (MIoT) and Mission CriticalServices (MCS),” according to Defiance.

ARK Innovation Fund (ARKK)

Expense ratio: 0.75% per year, or $75 on a $10,000 investment.

The actively managed ARK Innovation Fund (NYSEARCA:ARKK) is home to $1.09 billion in assets under management, making it one of ARK’s largest ETFs. Though not an exact replica, this tech ETF is similar to the aforementioned DTEC in provides exposure to multiple disruptive themes under the umbrella of one fund.

ARKK holdings include DNA technologies, industrial innovation in energy, automation and manufacturing, the increased use of shared technology, infrastructure and services (‘‘Next Generation Internet’)” as well as fintech firms, according to the issuer.

While there are plenty of tech ETFs with lower fees than ARKK, this fund’s management team is more than earning that fee. Over the past 36 months, this tech ETF is up nearly 171%. To put that into context, the gains of the Nasdaq-100 and S&P 500 Technology indexes combined over that same period do not equal ARKK’s performance. In fact, the gap almost 2,000 basis points.

Global X Longevity Thematic ETF (LNGR)

Expense ratio: 0.68% per year, or $68 on a $10,000 investment.

Disruptive tech ETFs do not always have to be actual tech ETFs. The Global X Longevity Thematic ETF(NASDAQ:LNGR) proves as much. There are elements of innovation and technology throughout the healthcare sector and LNGR reflects as much.

Notably, LNGR has a 36.41% weight to healthcare equipment stocks, one of the best-performing and fastest-growing segments of the broader healthcare sector. Aging populations through many major economies are an important fundamental driver of LNGR’s long-term thesis.

“Demand for senior assistance tools like walkers and pacemakers, and even new technologies like wearables and robot assistants, are expected to grow substantially,” according to Global X research. “While wearables have captured the attention of younger generations, there are ample use cases for seniors, such as monitoring their health or contacting emergency services.”

Todd Shriber does not own any of the aforementioned securities.

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