The broad technology sector has come up with
stronger-than-expected earnings this season thanks to a string of
earnings beat by popular names like Intel (
), Netflix (
), Yahoo (
), Facebook (
), Apple (
) and Amazon (
This is especially true given that the total earnings for 66.1% of
the sector's total market capitalization reported so far are up
8.3% with a beat ratio of 66.7%. Revenues are also up 4.9% year
over year with a beat ratio of 59.3%. However, this is still
slightly below the prior-quarter earnings growth of 8.7% and
revenue growth of 5.9% (read:
Technology ETFs: Pain or Gain Ahead?
The software giant - Microsoft (
) - also reported solid results for the third quarter of fiscal
2014, which was welcomed by investors. Microsoft appears to be
turning around its business with Satya Nadella taking charge as the
new CEO in early February, suggesting that the stock will enjoy
smooth trading in the coming days.
Microsoft Earnings in Focus
Though earnings per share of 68 cents slipped from the year-ago
earnings of 72 cents, it topped the Zacks Consensus Estimate of 62
cents. Revenues fell 0.4% year over year to $20.40 billion and were
slightly below our estimate of $20.47 billion.
While the Surface tablet, Xbox videogame console, Azure cloud
platform and Office 365 propelled revenues in the third quarter,
weak personal computer sales remained drag on the growth (read:
3 ETFs with Most Exposure to Microsoft
MSFT is pushing itself into the mobile and cloud computing world
from the traditional software space, suggesting strong optimism on
the company's future growth story. Based on Nadella's focus on the
growing segment of the tech space and earnings beat, MSFT shares
rose 2.5% at the close in after-market trading on Thursday.
Microsoft currently has a decent Zacks Rank #3 (Hold), underscoring
that it has potential for upside.
ETFs to Consider
For investors who believe in the company's new CEO's growth
strategies, we have highlighted three tech ETFs having large
allocation to this software giant that could be in focus in coming
all the Technology ETFs here
iShares S&P North American Technology-Software Index
This ETF provides exposure to the software segment of the broader
U.S. technology space by tracking the S&P North American
Technology-Software Index. The fund holds a small basket of 61
securities with Microsoft taking the second spot at 9.31% of total
The fund is quite popular and liquid with over $1.1 billion in AUM
and good average daily volume of more than 145,000 shares a day.
Expense ratio came in at 0.48%. IGV has lost about 0.7%
year-to-date and has a Zacks ETF Rank of 2 or 'Buy' rating with a
High risk outlook.
iShares Dow Jones US Technology ETF (
This ETF tracks the Dow Jones US Technology Index, giving investors
exposure to 143 stocks. The fund has AUM of nearly $3.9 billion
while charging 45 bps in fees and expenses. Volume is good as it
exchanges more than 372,000 shares a day. Microsoft occupies the
second position in the basket with 10.17% of assets after Apple
3 ETFs Set to Surge Post Solid Apple Earnings
The product is heavily skewed toward the technology hardware and
equipment segments, as these make up for half of the portfolio.
Software and computer services take the remaining portion in the
basket. The fund has added 2.5% in the year-to-date period and has
a Zacks ETF Rank of 3 or 'Hold' rating with a Medium risk outlook.
MSCI Information Technology Index ETF (
This fund provides exposure to a large basket of 408 technology
stocks with AUM of $88.6 million. This is done by tracking the MSCI
USA IMI Information Technology Index. The ETF has 0.12% in expense
ratio while volume is moderate at less than 66,000 shares a day.
Here too, MSFT is the second firm with 8.39% allocation. From a
sector perspective, the product is widely diversified across
software, IT Services, technology hardware storage &
peripherals, Internet software & Services and semiconductors
& semiconductor equipment with double-digit exposure. The ETF
has gained 1.4% year-to-date.
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FID-INFOTEC (FTEC): ETF Research Reports
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