When most people think of ETFs, they usually think of broadly diversified index ETFs. That’s what we generally use at The ETF Store. Most investors will do well by using those ETFs to build a well diversified portfolio that includes investments in a wide range of asset classes.
I recognize that isn’t good enough for a lot of people. They want to buy that hot tech stock they see on Cramer every night. Or they think Apple’s new product is so hot they need to get in before everyone else in the world figures out what Steve Jobs is going to come out with. If it’s not a hot stock, it’s the hottest tech stock fund highlighted in Money Magazine.
ETFs can now offer an elegant solution to the tech stock jockey who has to have his Google, Apple and Microsoft. The iShares Dow Jones U.S. Technology Sector Index Fund (ticker IYW) is an ETF from iShares that is focused on the U.S. Tech sector. It has a heavy dose of the biggest tech stocks (Microsoft was over 11% of fund assets at 3/31/09, Apple 7%, and Google 6%) with all the benefits of mutual fund-type diversification. What makes it even better is you get the added benefit of transparency, low costs and possible tax savings offered by ETFs.
So if you need to watch Cramer or read Money Magazine, enjoy. If you have to have tech stocks in your portfolio, though, look to ETFs.