They Own 6% of the Stock Market

2 | By Michael A. Robinson

There’s an under-the-radar reason why the stock market keeps rallying despite some mediocre economic numbers, constant “noise” out of Washington, and plenty of overheated valuations.

And while it’s a bit hidden, it’s huge.

In fact, it owned 6% of the U.S. stock market in the first quarter.

And it keeps gobbling things up.

It bought $98 billion in U.S. stocks during the first three months of the year – and that puts it on pace to surpass its total purchases for 2015 and ’16 combined.

I’m talking about exchange-traded funds (ETFs) and Main Street investors’ big appetite for passive investments.

Those investors keep putting more money into funds they can then forget about – and the market keeps rising.

Now you could join them and buy some passive index funds.

But that’s not what we do here. We’re in search of investments on the Frontier – ones that will double, triple… even quadruple our money.

So let’s get active and go in search of three ETFs that will get us to that Frontier.

All three will continue to double the market’s return – and line your pockets – for years to come…

Combo Play

While we’re active stock pickers here at Strategic Tech Investor, I do recommend making several tech ETFs part of your core holdings because they target the most profitable trends and give you instant diversification.

Plus, they take advantage of the fact that tech remains one of the big drivers in this bull market that began in March 2009. Even though we do see the sector come under pressure from time to time, as it did again a couple of weeks ago, technology remains the best place to make life-changing gains.

And to get yourself on the Road to Wealth

Again, I’m not saying you should avoid individual stocks. We use ETFs to provide a solid base so that you can focus on the big winners among individual tech shares.

That’s where my two paid services come into play. We just closed the books on the second quarter and totally crushed the market.

During the period, the S&P 500 gained 2.6%. But readers at my Nova-X Report more than tripled that, with an average gain of 8.1%. Members of my Radical Technology Profits premium service did even better. They earned an average 12.9% return, beating the broad market by just shy of fivefold.

Several stocks at each service did even better than that, with some climbing 30% or more in just three months.

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Now, let’s make sure you add to your foundational holdings by taking advantage of the big upsurge we see in ETF investing.

But let’s do so actively.

I’ve come up with three that are focused on high tech, and that have great returns and very low overhead – they pass all three of my ETF Profit Screens. That means your profits won’t get eaten by expenses.

If you ever thought ETFs couldn’t get you to the Frontier – think again.

Take a look at these three…

Frontier ETF No. 1

The SPDR S&P Semiconductor ETF (NYSE: XSD) is a great play on a very basic fact- our tech-driven world needs chips for just about everything, from smartphones and connected cars to Wi-Fi routers and data centers.

Add in the Internet of Everything, virtual reality, and artificial intelligence – and you can see we’re looking at strong demand for years to come.

With XSD, we get to invest in roughly 50 firms covering nearly every aspect of the chip sector.

Of course, it hold industry giants like Intel Corp. (Nasdaq: INTC). It also holds Skyworks Solutions Inc. (Nasdaq: SWKS), which ranks as a force in the mobile and broadband markets.

Nvidia Corp. (Nasdaq: NVDA) makes advanced graphics processors now being used in connected cars, VR, and AI. And Integrated Device Technology Inc. (Nasdaq: IDTI) is a small-cap firm that sells sophisticated computer memory systems to the wireless industry.

No wonder XSD is such a strong performer. Over the past year, it has soared roughly 41%, more than double the gains of the S&P 500. XSD trades at $62, with an expense ratio of 0.35%.

Frontier ETF No. 2

Holding more than 40 stocks, First Trust Dow Jones Internet Index (NYSE: FDN) is set up to take advantage of the broad changes occurring in the internet industry, including a nice sub-focus on e-commerce.

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For instance, it holds ecommerce titans eBay Inc. (Nasdaq: EBAY) and Inc. (Nasdaq: AMZN). FDN also owns Netflix Inc. (Nasdaq: NFLX) and Alphabet Inc. (Nasdaq: GOOGL).

Plus, FDN holds web “pick and shovel” plays like Netgear Inc. (Nasdaq: NTGR), which supplies Ethernet switches to homes, businesses, and internet service providers.

And it gives us a couple of nice plays on online trading. FDN holds both E*Trade Financial Corp. (Nasdaq: ETFC) and TD Ameritrade Holding Corp. (Nasdaq: AMTD).

For the year ended June 30, FDN is up roughly 31%, right at double the gains of the S&P 500. It trades at roughly $94 and has a 0.54% expense ratio.

Frontier ETF No. 3

I’ve recommended the iShares North American Tech ETF (NYSE: IGM) several times over the past three years. And for two very good reasons.

Let’s start with its performance. Over the past year, it has more than doubled the overall market’s return, with 31% gains. Over the past five years, it has beaten the S&P by just shy of 70%, showing that its upside just keeps getting better.

And that brings me to my second point. This ETF covers all the big leaders in tech, a group that has been a big factor in the market’s rally over the past year.

We’re talking firms like Apple Inc. (Nasdaq: AAPL), Microsoft Corp. (Nasdaq: MSFT), Amazon, and Facebook Inc. (Nasdaq: FB) that make up 30% of its portfolio.

These firms have used their size to outgun smaller rivals, and each has spread its swings into the fastest-growing areas of tech. While many of the firms in IGM have done a great job reaching into global markets, they all count on North America as their major source of strength.

You can’t blame them. Since the 1960s, Silicon Valley has ushered in wave after wave of tech breakthroughs, from chips and the personal computer to the smartphone and cloud computing. It’s also one the main reasons why the United States boasts the world’s largest economy.

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And there’s plenty of breadth here as well. Holding some 285 stocks, IGM trades at roughly $126.50. It has a 0.48% expense ratio.

Each of these ETFs takes advantage of big tech tends you can count on for the long haul.

That means you can hold them for years to come, knowing that they’ll help you steadily build your net worth.

And now they’re on your radar.

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2 Responses to They Own 6% of the Stock Market

  1. Robert in Vancouver says:

    There is a covered call ETF on the TSX that holds the 20 biggest tech companies in the world and pays a 7.7% dividend, paid monthly. There is a CDN Dollar ETF (HTA) and a US Dollar ETF (HTA.U).

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