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Buy 3 Country ETFs to Tap the Tech Boom

Sanghamitra Saha

The coronavirus pandemic has driven the tech sector to a new height. The requirement of social distancing changed the consumer lifestyle to a purely digital one. The work-learn-shop-and-entertainment from home trend has made tech stocks investors’ darlings this year.

People may choose to stay indoors again during the second wave of the contagion. So, investors will continue to pile up software shares which are apparently more insulated from the impacts of the virus. While betting big on tech stocks and ETFs is a common way, there are three country ETFs that could be used to beat the global medical emergency. These ETFs have a Zacks Rank #2 (Buy).

KraneShares CSI China Internet ETF KWEB

The fund investors should note that the fund actually gives access to Chinese Internet, e-commerce and tech companies that provide similar services as Google, Facebook, Twitter, eBay, Amazon, etc. Alibaba (9.41%), Tencent (8.8%) and Meituan Dianping (7.66%) are the top three holdings. The fund charges 76 bps in fees.

The fund gives 60.3% exposure to the technology sector, followed by consumer discretionary (33.7%). These stocks are poised to benefit from increasing domestic consumption by China's growing middle class. The fund also focuses on Chinese Internet companies listed in both the United States and Hong Kong. Chinese retail web sales were $1.5 trillion in 2019 (compared to $601.7 billion in the United States), marking an increase of 16.5% year over year.

iShares MSCI Israel ETF EIS

The 117-stock fund gives exposure to a broad range of companies in Israel. The fund charges 59 bps in fees. Information Technology takes about 38.55% of the fund, followed by 19.66% focus on Financials, 12.25% exposure to Health Care.

The top spot is acquired by Teva Pharmaceutical (11.28%) while Check Point Software Technologies, Nice Ltd and Wix.Com Ltd round out the top four positions. These companies take about 9% exposure each.

The country’s broader tech sector has caught the attention of U.S. tech behemoths recently. Mobileye (sold to Intel in 2017 for $15.3 billion) and Waze (sold to Google for $1 billion) deserve mention in this regard.

The coronavirus outbreak benefited the fund massively. The resultant rise of cloud-based services (due to work-and-learn-from-home trend) made Wix (went public in 2013) a true winner this year. The stock has added about 150% in the past three months.

Israeli health-tech companies have also been benefitting greatly amid the ongoing medical emergency. Israel’s health-care system has been digitized for two decades. Its start-ups, including Healthy.io, Tytocare and K Health, are attracting investment and customers in major global markets, per CNBC.

VanEck Vectors Israel ETF ISRA

The 145-stock fund tracks the price and yield performance of the BlueStar Israel Global IndexTM, which comprises equity securities, which may include depositary receipts of publicly traded companies that are generally considered by the Index Provider to be Israeli companies.

Israel takes the top spot at 72.58%, followed by the United States (24.35%). Here also, Teva (8.66%) takes the top spot, followed by Check Point Software Technologies (8.07%), Nice Ltd (6.54%) and Wix.Com Ltd (6.44%).

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KraneShares CSI China Internet ETF (KWEB): ETF Research Reports
 
VanEck Vectors Israel ETF (ISRA): ETF Research Reports
 
iShares MSCI Israel ETF (EIS): ETF Research Reports
 
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