Best way invest USA Technology

stphnstevey

I was looking at investing a small amount in USA Technology and was wondering the best way to do this

I could invest in shares of the FAANGS, but also looked at ETFs. I am not sure of the best Indexes for US Tech, but have looked at these

Invesco EQQQ NASDAQ-100 UCITS ETF
iShares S&P 500 Information Technology Sector UCITS ETF USD (Acc)

I guess there will be a normal debates of why invest in US Tech, but if anyone else has done this, I would appreciate how they have done this

I realise that S&P 500 and World trackers have a % exposure to US Tech companies

Wildsound

If you go the fund route, my preference is a managed global technology fund. There are quite a few to choose from including the following:

- Aberdeen Global Technology
- AXA Framlington Global Technology
- Fidelity Global Technology
- Janus Henderson Global Technology
- Neptune Global Technology
- Polar Capital Global Technology (I currently have the hedged share class in my portfolio)

- L&G Global Technology Index Trust (if you want a tracker type fund)

- Pictet Robotics Fund (a specialist tech fund with more emphasis on robots and AI, if that is your thing).

I'm sure there are others which I haven't listed above.

A lot of people say the FAANGS are way overvalued and their day of reckoning will come, which is why I like to think that a managed fund with a team of experts behind them would be able to diversify globally in good up and coming tech, as well as be able to reduce their exposure to the FAANGS when the time is right.

Voyager2002

You need to decide whether you want active or passive management; and whether you want 100 per cent in the USA or would accept a broader portfolio chosen by a fund manager. And of course you need to think about your definition of technology, which might not be the same as that used by the manager of a technology fund (for instance, many businesses that grow rapidly by applying robotics but are not developing robotics might be of interest to you, but not included in most technology funds).

Anyway, what kind of technology? There are specialist funds and ITs covering Biotechnology; Healthcare Innovation; as well as the obvious ones like IT.

stphnstevey

Voyager2002 wrote: »

You need to decide whether you want active or passive management; and whether you want 100 per cent in the USA or would accept a broader portfolio chosen by a fund manager. And of course you need to think about your definition of technology, which might not be the same as that used by the manager of a technology fund (for instance, many businesses that grow rapidly by applying robotics but are not developing robotics might be of interest to you, but not included in most technology funds).

Anyway, what kind of technology? There are specialist funds and ITs covering Biotechnology; Healthcare Innovation; as well as the obvious ones like IT.

Passive USA IT, FAANGs mainly, around 100 companies

BLB53

I really like Scottish Mortgage for my tech exposure. Held for past 3 yrs only and SP has doubled...now wish I had purchased much earlier!

bowlhead99

stphnstevey wrote: »

Voyager2002 wrote: »

You need to decide whether you want active or passive management; and whether you want 100 per cent in the USA or would accept a broader portfolio chosen by a fund manager. And of course you need to think about your definition of technology, which might not be the same as that used by the manager of a technology fund (for instance, many businesses that grow rapidly by applying robotics but are not developing robotics might be of interest to you, but not included in most technology funds).

Anyway, what kind of technology? There are specialist funds and ITs covering Biotechnology; Healthcare Innovation; as well as the obvious ones like IT.

Passive USA IT, FAANGs mainly, around 100 companies

So you want around 100 companies but you want the money to mainly be allocated to FAANG (five companies). Why bother with the other 95? If the answer is because the other ones are the future, why use an index so that the portfolio will be dominated by the ones that are the past and present and not those other 95 companies which represent the future?

You want to be allocated to "IT", an abbreviation for information technology. While that sounds like Google and Facebook (Sector: Technology; Industry: Internet Content & Information) it sounds less like Apple (Sector: Technology; Industry: Consumer Electronics) and even less like Netflix (Sector: Consumer Cyclical; Industry: Media - Diversified) or Amazon (Sector: Consumer Cyclical; industry: Specialty Retail).

You mention you want US Tech, so does that presume you don't want Alibaba, being massive Chinese tech, but which happens to be listed in NY? And if you do, why wouldn't you want Tencent, which happened to put its listing in Hong Kong instead of on the NYSE?

I get the impression from your post that you are not particularly interested in the "why US tech?" question and just want to practically know how people have done it. But without a deep understanding of what you want and why, it's difficult for both you and us to know how best to approach it.

I don't have any 'US only, 100 constituent, tech sector index funds'. I do have Scottish Mortgage as mentioned by others, which is tech heavy. I've also held individual tech companies from time to time (the few thousand pounds of Netflix remaining in my pension is showing 310% up, despite getting on board somewhat late; likewise with Baba only up 100% or so with a smaller holding; I made a very good return on Tencent when I sold out last year as I had to cash in some ISA to help buying a new property...). If you only mainly or really want the FAANGs, you could just buy them direct.

Perhaps another obvious point is, in your OP you say you were only looking to invest a "small amount" in this US tech stuff. So in the context of your personal wealth or your investment portfolio, it won't make a massive difference whether you have some hyper-specific allocation to the FAANGs and 95 other companies in an obscure index vehicle; or a more generalist investment allocation via some other US or global find which happens to like US tech firms. What's the reason that can't be the sensible approach for you?

Prism

Alphabet and Facebook are moving out of the tech category into communications later this year so be careful with index trackers for the moment

MPN

If you wanted to consider IT's instead of a passive index tracker youcould look at Allianz Technology Trust (ATT) or Polar Capital Technology Trust (PCT).

stphnstevey

I ended up looking into these:

- Xtrackers MSCI USA Information Technology Index UCITS ETF 1D
- iShares S&P 500 Information Technology Sector UCITS ETF USD (Acc)
- SPDR S&P US Technology Select Sector UCITS ETF

They are 0.12-0.15% OCT

Example:
iShares S&P 500 Information Technology Sector UCITS ETF USD (Acc)
• Top 10 (Totalling 65% of entire ETF holdings)
o APPLE INC 17.13
o MICROSOFT CORP 13.21
o FACEBOOK CLASS A INC 6.45
o ALPHABET INC CLASS C 5.66
o ALPHABET INC CLASS A 5.63
o VISA INC CLASS A 4.02
o INTEL CORPORATION CORP 3.46
o CISCO SYSTEMS INC 3.44
o MASTERCARD INC CLASS A 3.03
o NVIDIA CORP 2.61
• Since 20-Nov-2015
• Size £1252 Million


I note that neither of these hold Amazon or Netflix - I presume as they are not classified as IT sector? This seems to explain it a little https://www.justetf.com/uk/news/etf/a-new-industry-sector-is-born.html?utm_campaign=20181116-uk-newsletter&utm_medium=email&utm_source=CleverReach&utm_content=Mailing_11103045

Investing in an ETF rather than buying the individual shares seems to have 2 advantages
- slightly more diversified than shares in a single company
- can be purchased in £ and no currency conversion charge (as buying the USA shares would)

I have to say I am not recommending the above and have not as yet invested myself. In fact, after purchasing some individual USA shares and feeling way too overexposed to a single company and begrudging the currency conversion, I am happy that some of an S&P 500 tracker is enough specification for me

londoninvestor

stphnstevey wrote: »

I note that neither of these hold Amazon or Netflix - I presume as they are not classified as IT sector?

Also, if you look at an up-to-date list of holdings in the iShares S&P500 Information Technology ETF, you'll see that Facebook and Alphabet are no longer there. That's because they've moved into Communication Services.

Netflix was previously in Consumer Discretionary, but is now in Communication Services too.

Amazon remains in Consumer Discretionary.

Prism

This is the latest factsheet for that iShares fund. Apple, Microsoft, Visa, Cisco, Mastercard..

https://www.ishares.com/uk/individual/en/literature/fact-sheet/iuit-ishares-s-p-500-information-technology-sector-ucits-etf-fund-fact-sheet-en-gb.pdf

Amazon are primarily retail company not a tech company. Netflix is pretty much in the same category as a TV broadcaster.