The Technology sector ranks fourth out of the 11 sectors as detailed in our 2Q18 Sector Ratings for ETFs and Mutual Funds report. It gets our Neutral rating.
My ratings on ETFs are unique because they are based on my stock ratings for each of a fund’s holdings.
Analyzing and rating an ETF based on its holdings delivers many interesting insights:
Having too many choices can be intimidating. And there are definitely lots of choices when it comes to ETFs. For example, in the equity market alone, there 30+ technology sector ETFs, or 35 ‘large cap value’ and 20 financial ETFs. A very healthy selection abounds for every category of ETF.
The problem is that these ETFs are not made the same even though they may be in the same category. There are major differences in methodologies between funds, which results in drastically different holdings even within a given sector. See Figure 1.