5 Tech ETFs Surviving Sell-Off Induced By Rising Yields

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The technology sector has been witnessing huge volatility in recent weeks on surging yields, sparking fears of overvaluation after an astounding performance during the pandemic.

This is especially true as the sector relies on easy borrowing for superior growth and its value depends heavily on future earnings. Rise in long-term yields lower the present value of companies’ future earnings. Notably, the yields on 10-year US Treasury jumped to their highest since January 2020 at 1.75% while the 30-year yields topped 2.5% for the first time since August 2019.

The latest Fed meeting added to anxiety in the sector as it raised the forecasts for growth and inflation. The Fed lifted GDP growth projection from 4.2% to 6.5% for this year — the fastest pace since 1984. Inflation is expected to rise 2.4% this year and then slow next year to 2%. The Fed’s tolerance for faster inflation this year has triggered another wave of selling in the sector though Fed Chairman Jerome Powell viewed it to be temporary given the COVID-19 disruption in the labor market.

However, the sector outlook remains solid given the global digital shift that has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping. The rapid adoption of cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence, machine learning, digital communication, and 5G technology will continue to drive the sector higher.

Amid the uncertainties, a few ETFs from the sector are still surviving. We have highlighted five of these that have been in green in a month and could continue their ascent amid the tech volatility.

Reality Shares Nasdaq NexGen Economy ETF (BLCN - Free Report) – Up 6.3%

This ETF tracks the Reality Shares NASDAQ Blockchain Economy Index, which measures the return of companies that are committing material resources to develop, research, support, innovate or utilize blockchain technology for their use or for use by others. It holds 70 stocks in its basket with AUM of $318 million and trades in an average daily volume of 123,000 shares. The product charges 68 bps in annual fees.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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