financial investment

7 Smart Tech ETFs for the Next Generation

An easy and affordable way to invest in tech.

Investors love high-technology stocks because they offer exciting new ideas that can disrupt old ways of doing business, connect with new customers and offer tremendous growth. However, for every success story like the $1 trillion Microsoft Corp. (ticker: MSFT), there are countless startups that never turn a profit and disappear after losing investors a bundle. Exchange-traded funds are a great way to invest in tech stocks in a way that takes out some of the risk through diversification. These seven highly targeted ETFs focus on next-generation stocks, and are worth a look if you want to invest in the high-growth business of tomorrow's technologies.

Next:First Trust Cloud Computing ETF (SKYY) Credit

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First Trust Cloud Computing ETF (SKYY)

Cloud computing means you can access data from anywhere you have an internet connection instead of needing to take the information with you on a hard drive or disk. This movement has countless applications, and SKYY does a great job tying up all the various tech stocks that are capitalizing on the benefits of this trend. From enterprise software platforms like Oracle Corp. (ORCL) to hosting and connectivity giants like Amazon.com (AMZN) with its Amazon Web Services arm to IT services firm Twilio (TWLO) that offers a cloud-based communications such as text messages and voice calls, the true productivity potential of the cloud is fully represented in this ETF’s components.

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An easy and affordable way to invest in tech.

Investors love high-technology stocks because they offer exciting new ideas that can disrupt old ways of doing business, connect with new customers and offer tremendous growth. However, for every success story like the $1 trillion Microsoft Corp. (ticker: MSFT), there are countless startups that never turn a profit and disappear after losing investors a bundle. Exchange-traded funds are a great way to invest in tech stocks in a way that takes out some of the risk through diversification. These seven highly targeted ETFs focus on next-generation stocks, and are worth a look if you want to invest in the high-growth business of tomorrow's technologies.

First Trust Cloud Computing ETF (SKYY)

Cloud computing means you can access data from anywhere you have an internet connection instead of needing to take the information with you on a hard drive or disk. This movement has countless applications, and SKYY does a great job tying up all the various tech stocks that are capitalizing on the benefits of this trend. From enterprise software platforms like Oracle Corp. (ORCL) to hosting and connectivity giants like Amazon.com (AMZN) with its Amazon Web Services arm to IT services firm Twilio (TWLO) that offers a cloud-based communications such as text messages and voice calls, the true productivity potential of the cloud is fully represented in this ETF’s components.

ALPS Clean Energy ETF (ACES)

The global economy is adjusting to limit carbon emissions. This summer marked the first time that the U.S. generated more energy from renewable sources than from coal. The ACES fund is a direct way to invest in this evolution of energy sourcing, with companies like First Solar (FSLR) and Brookfield Renewable Partners (BEP) among its top components. There are also energy efficiency plays in there, too, such as LED lighting giant Cree (CREE), but collectively the portfolio tells a story of using less fossil fuels. This next-generation trend is well under way and will gather momentum in the years to come.

KraneShares Electric Vehicles & Future Mobility ETF (KARS)

A related but equally notable trend is the movement toward electric vehicles, ridesharing and self-driving cars. According to KraneShares, the global electric vehicle market is projected to hit $2.7 trillion in total investment by 2040, and autonomous cars and the “passenger economy” will be an $8 trillion market. Companies that immediately spring to mind as part of this trend include Tesla (TSLA), but KARS does a good job wrapping up other pieces of the puzzle like Google parent Alphabet (GOOG, GOOGL) that has ambitious self-driving car plans and chipmaker Nvidia Corp. (NVDA), which provides the powerful computers that fuel the artificial intelligence in autonomous vehicles.

ROBO Global Robotics & Automation Index ETF (ROBO)

From industrial automation to robotic surgical tools, there are a host of high-tech companies out there looking to take human error – and payroll expenses – out of picture. Some politicians get up in arms about this trend, but the bottom line is that automation results in cheaper goods for consumers with better quality controls. That is ultimately good for the broader global economy, even if it’s unpleasant for workers in a specific industry. If you are looking to profit from this next-gen trend, then consider ROBO and its diverse assortment of 95 holdings including thermal imaging and sensor company FLIR Systems (FLIR) and Japanese robotics play Nabtesco Corp. (NCTKF), among others.

ETFMG Video Game Tech ETF (GAMR)

You may think that video games are just kids’ stuff, but data from the Entertainment Software Association shows the average gamer is 34, and roughly two-thirds of U.S. households include someone who plays video games regularly. That makes gaming a big business, with the industry racking up more than $134 billion in 2018. If you want to tap into the nearly constant growth of gaming worldwide, then consider the GAMR fund. More than 70 total components span the breadth of the gaming industry, from smaller software studios to big hardware manufacturers and tech conglomerates. Holdings include Activision Blizzard (ATVI), plus picks you may never have heard of across Asia.

Defiance Next Gen Connectivity ETF (FIVG)

A new ETF, FIVG is a trend on 5G wireless technology that will upgrade the current data networks’ connectivity and functionality. The first iPhone launched just 12 years ago and at that time wireless providers were not thinking of a future where almost every consumer would expect to be able to stream movies, music and more. FIVG has some big telecom names as its components, but also technology providers such as Skyworks Solutions (SWKS) and Xilinx (XLNX) that will be called up to help upgrade these networks. The idea we’ll be using even more data and relying just as much on smartphones and other mobile devices seems close to a sure thing.

Amplify Online Retail ETF (IBUY)

While retail sales have generally seen tepid growth lately, one category that continues to grow lightning fast is e-commerce. One recent report estimated that 2018 online retail sales grew 15% last year, on top of almost 16% growth the year before. IBUY is focused on online retailers. The index is a diverse group of global corporations and demands its components obtain at least 70% of their revenue from online or “virtual” sales. Components include the usual choices like Amazon and eBay (EBAY) but also online food delivery portal GrubHub (GRUB) and travel site Expedia Group (EXPE) among others. Together, they represent the biggest and fastest-growing companies in e-commerce.

Smart ETFs to invest in next-generation technology.

First Trust Cloud Computing ETF (SKYY)ALPS Clean Energy ETF (ACES)KraneShares Electric Vehicles & Future Mobility ETF (KARS)ROBO Global Robotics & Automation Index ETF (ROBO)ETFMG Video Game Tech ETF (GAMR)Defiance Next Gen Connectivity ETF (FIVG)Amplify Online Retail ETF (IBUY)1 of 10

Jeff Reeves, Contributor

A veteran journalist with extensive capital markets experience, Jeff Reeves began writing for ...  Read more

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