The looks on my wife’s face said it all. And no, that’s not a typo.
I used the plural form of the word to convey the range of emotions my wife displayed in under a minute.
It went down like this. I had been pestering her for days during the coronavirus panic to let me have a look at her retirement portfolio.
Since she was working from home and had her laptop there, Tracy finally gave in to the pressure.
As her account’s webpage loaded, she first seemed very afraid. Then she looked alarmed.
Tracy then stared me dead in the eyes with an expression that said, “now what?”
Fortunately, she has me to help. Not only am I a seasoned tech analyst but I personally rebuilt her portfolio after the 2008 financial crisis and turned it into a top performer.
Tracy is far from alone. Millions of us are right now either rebuilding our portfolios or putting together investing watchlists.
Rebounding From a Crisis
Now then, I’m actually proud of the impact I had on my wife’s retirement account after it was mauled in the financial crisis that ended in early 2009.
In fact, a few quarters after I redid her investments, her finance manager came in to ask how she had gotten such great performance.
I’m telling you that not to brag (well maybe just a little), but let you know I have plenty of experience under my belt.
So, for me, this process is bigger than just our twice-weekly tech-investing chats. I can relate on a deeply personal level.
That’s why I want to share with you three great tech investments that can serve as a starter portfolio for young people and as a way to rebuild retirement accounts for older workers. Take a look:
Tech ETF Wealth Builder No. 1: IGM
This is my go-to tech ETF. The iShares Expanded Tech Sector ETF (IGM) covers all the big leaders in tech, a group that had been a big factor in the 11-year bull market that ended with the coronavirus panic on February 19.
With this one play, we gain access to hardware, software, web marketing, and interactive media. And since it’s geared to larger companies, it sidesteps the even-greater volatility we’ve seen with small caps.
The ETF’s top 10 holdings comprise roughly 54% of the portfolio. We’re talking firms like Facebook Inc. (FB), Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN), which make up around 30% of its portfolio.
Networking leader Cisco Systems Inc. (CSCO) rounds out IGM’s top 10 holdings, accounting for 2.2% of the fund.
And there’s plenty of depth here as well. Holding some 302 stocks, IGM has a 0.46% expense ratio. This is a strong performer. For the two years ended February 19, IGM almost exactly doubled the S&P’s return.
Tech ETF Wealth Builder No. 2: XSD
This fund takes advantage of a simple fact — our tech-driven world needs semiconductors for just about everything, from smartphones to the connected car to Wi-Fi routers.
With the SPDR S&P Semiconductor ETF (XSD), we invest in roughly 35 firms covering nearly every conceivable aspect of the chip industry.
For instance, Advanced Micro Devices Inc. (AMD) is one of the world’s top chipmakers and specializes in advanced and high-speed devices. The Silicon Valley firm ranks as the ETF’s largest hold, weighing at 4.15% of the portfolio.
Inphi Corp. (IPHI) is a leading maker of advanced semiconductors and optical networking gear. Specializing in optical interconnect devices, Inphi ranks as one of the world’s more important suppliers to cloud computing data centers.
Lattice Semiconductor Corp. (LSCC) is well-positioned as a key chip supplier in the coming era of Edge Computing. Its devices can be programmed in the field for remote applications that can bypass data centers for faster computing.
And Nvidia Corp. (NVDA) makes cutting-edge graphics processors that can be used for virtual reality and artificial intelligence. It ranks as XSD’s third-largest holding and accounts for just shy of 4% of the portfolio.
No wonder XSD was such a strong, pre-crisis performer. For the two years ended February 19, it beat the S&P by 128.3%.
Tech ETF Wealth Builder No. 3: IHI
If nothing else, the coronavirus showed the world the importance of medical devices. Yes, a lot of media attention focused on surgical masks, respirators, and test kits.
But in reality, the medical device market is much, much larger than that. This is a field that covers everything from in-vitro diagnostics to remote heart monitoring to deep brain stimulation.
As such, medical devices are on the front lines of healthcare innovation. A lot of that innovation is taking place right here in the U.S.
Indeed, data compiled by SelectUSA notes that the domestic market accounts for 40% of the global $156 billion medical device field. The agency says that by 2023, the global market will be worth $208 billion.
I continue to recommend the iShares U.S. Medical Devices ETF (IHI) as a cost-effective way to play the whole field at once. The fund has a 0.43% expense ratio.
More than 60% of this portfolio is anchored by 10 of the world’s most innovative device makers.
For instance, Boston Scientific Inc. (BSX) makes a range of medical devices with strong franchises in heart rhythm diagnostics, pacemakers, and infection prevention. Weighing in at 3.7% of the portfolio, the stock is the fund’s 10th-largest holding.
Abbott Laboratories (ABT) ranks as IHI’s largest holding and accounts for nearly 14% of the fund. It recently made news when the U.S. Food and Drug Administration approved one of the firm’s kits for diagnosing COVID-19.
Rest assured, this also was a great performer that should crush the broad market once again. For the two years ended February 19, it beat the S&P by 107.5%.
IHI is the ETF I had in mind when we spoke on April 3 about tech tools being used to thwart the spread of the COVID-19 virus. It’s a great way to harness the full power of medtech.
But as you can see from their great historic return, all three greatly exceed the overall market.
And for that reason, I recommend these as great long-term investments.
But if you are not quite ready to get back into the market in full swing, at the very least put these on your tech investing watchlist.
Cheers and good investing,
Michael A. Robinson