Technology sector

2 ETFs to capitalize on recent declines in the tech sector

Tech stocks have mostly started 2022 on a negative note, as index has lost 5% since the start of the year. Seasoned investors realize that occasional market declines, particularly around earnings release dates, can provide reasonable entry points into strong stocks and the exchange-traded funds (ETFs) that invest in them.

Over the past decade, buying quality tech stocks has resulted in significant portfolio returns for long-term investors. A recent JPMorgan Chase report highlights that the sector accounts for 28% of market capitalization in the United States. The investment bank expects the technology and healthcare sectors to “generate most of the transformation and growth headlines” in 2022.

Today’s article features two ETFs that might appeal to readers looking to include tech stocks in their portfolios.

1. Invesco S&P 500 Equal Weight Technology ETF

  • Current price: $301.11
  • 52 week range: $247.33 – $327.81
  • Dividend yield: 0.41%
  • Expense ratio: 0.40% per year

We recently explained why investing in equally weighted ETFs could help offset volatility during a busy earnings season. Our first fund, the Invesco S&P 500® Equal Weight Technology ETF (NYSE:), to the sector of the Index. This equally weighted fund began trading in November 2006.

RYT, which has 78 stocks, tracks the S&P 500 Equal Weight Information Technology Index. The top 10 holdings represent about 15% of net assets of $2.81 billion.

In terms of subsectors, the fund is divided into semiconductors and semiconductor equipment (26.16%), IT services (25.96%), software (20.80%) and electronic equipment, instruments and components (11.55%).

Global Payments (NYSE:), which provides payment technology services; Name of software as a service (SaaS) Citrix systems (NASDAQ:), which offers workstation solutions; enterprise technology company Hewlett Packard Enterprises (NYSE:); western digital (NASDAQ:), which provides memory and data storage solutions; and group of chips Micron Technology (NASDAQ:) lead the names on the list.

Over the past 12 months, the ETF has risen around 16% and reached an all-time high on December 30, 2021. But since then it has lost more than 8%.

Forward P/E and P/B ratios are 22.01x and 5.83x. Interested readers whose long-term portfolios can handle short-term volatility might consider investing around $290.

2. ROBO Global Robotics And Automation Index ETF

  • Current price: $64.32
  • 52 week range: $59.58 – $72.41
  • Dividend yield: 0.19%
  • Expense ratio: 0.95% per year

Technological advancements in artificial intelligence (AI) and machine learning are providing tailwinds for the wider world of robotics across different industries. Recent statistics to suggest:

“Global Robotics Market was valued at $27.73 Billion in 2020 and is projected to reach $74.1 Billion by 2026.”

Such an increase would imply a compound annual growth rate (CAGR) of almost 17.50% between 2021 and 2026.

Our next fund, the ROBO Global Robotics and Automation Index ETF (NYSE:), invests in names focused on robotics, automation and artificial intelligence (RAAI).

ROBO Weekly Chart

ROBO, which has 82 stocks, was first listed in October 2013. The top 10 stocks account for nearly 18% of net assets of $1.9 billion.

Digital health company iRhythm Technologies (NASDAQ:)), known for its wearable heart monitors; communication group Vocera Communications (NYSE:), which primarily focuses on the healthcare industry; gene sequencing specialist Illuminated (NASDAQ:), based in Taiwan Air Tac International (TW:), which manufactures pneumatic equipment; and Intuitive surgery (NASDAQ:), which is known for its da Vinci robotic surgical system, are among the fund’s top stocks.

About half of ROBO’s businesses are based in the United States. The others come from Japan (18.88%), Germany (6.95%), Taiwan (5.84%) and Switzerland (4.20%). Therefore, currency fluctuations could have an impact on the fund’s returns.

The ETF reached an all-time high in early November 2021. However, since then it has lost more than 10%.

Readers should understand that thematic investing can be volatile, especially in the short term. As Wall Street awaits the Fed’s next decision, capital rotation is underway. Investors pressed the “sell” button on names with high valuations. Therefore, further declines could be possible in ROBO. We would consider the $63 level as a better entry point.