From Zacks: The global technology sector was under pressure in the last one month, but not all tech ETFs are feeling the pain.
A spate of threats emanating from Facebook‘s (FB – Free Report) data breaches and consequent concerns over stringent regulations over the social media space, a massacre with Nvidia’s self-driving car tests and an acute selloff in Netflix on overvaluation thrashed the space.
If these weren’t enough, the U.S. Commerce Department’s Bureau of Industry and Security barred American companies from selling to ZTE for seven years as the Chinese company had allegedly “broken a settlement agreement with repeated false statements” and has been involved in exporting telecom equipment to Iran and North Korea (read: Short-Term Pressure Ahead for China Tech ETFs?).
Then,Taiwan Semiconductor Manufacturing Co Ltd (TSM – Free Report) dealt a blow to the tech industry on Apr 19 after the company reported Q1 results before market open and pointed at a decline in smartphone demand. The company’s revenue forecast target for the second quarter came in the range of $7.8 billion to $7.9 billion, falling shy of the analysts’ expectation of $8.8 billion. International Monetary Fund (IMF) too said that the smartphone-driven tech cycle probably topped in late 2015.
The saturation in demand in developed markets and lengthening of upgrade cycles are weighing on the overall smartphone sales. Year over year, Apple logged a decline (5%) in iPhone sales in the fourth quarter of 2017 and Samsung saw a unit decline of 3.6%. Since
TSMC is big supplier of Apple (AAPL – Free Report) , order cuts from the current Apple iPhone X processor took a hit to the iPhone maker too. Also, Lam Research (LRCX – Free Report) offered a disappointing outlook for chip-gear shipments for the rest of the year (read: Should You Buy the Dip in Chip ETFs Ahead of Q1 Earnings?).
All these have led Technology Select Sector SPDR Fund (XLK – Free Report) to lose about 1.1% in the last one month (as of Apr 23, 2018). Most tech ETFs were in the red in the last one month and generated muted returns.
ETFs That Were in the Green
Against this backdrop, we would like to highlight that there are a few technology ETFs that have stayed steady during this timeframe.
The underlying Prime Cyber Defense Index applies a rules-based investment methodology to pick companies actively involved in the cyber security industry..
The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors (read: Forget Tech Woes: Buy These Cybersecurity Stocks & ETFs).
The fund looks to track companies whose products and services are driving innovation behind future security which includes the areas of cyber security, advanced border security, and the following areas for military application: robotics, drones and drone technologies, space technology, wearable technologies and virtual or augmented reality activities.
The fund picks stocks on the basis of a few factors. Those are: inexpensive stocks, financially healthy firms, trending stocks and relatively smaller companies.
The fund gives exposure to the technology hardware segment of the S&P Total Market Index.
The ETFMG Prime Cyber Security ETF (HACK) was unchanged in premarket trading Wednesday. Year-to-date, HACK has gained 14.95%, versus a -1.45% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Zacks Research.