It is hard to deny that the world is driven by technology. And while computers, cell phones, and the internet have become common place, there are plenty of other sectors that are just on the cusp of breaking out and becoming extremely important industries.
And while we have all heard of the niche industries outlined below, you may not have known that you can easily invest in all of them with ETFs. This approach also helps to lower risk levels by spreading out assets, and it ensures that you don’t have to worry about picking which companies will soar and avoiding those that fall by the wayside (see all the Tech Sector ETFs here).
Below, I’ll briefly highlight a few exciting long term trends in the technology world and corresponding ETFs to play them. These selections are perfect for investors who not only have a long time horizon, but have a high risk tolerance as well. All could see high levels of volatility, but given some of the broad trends in the space, it seems very likely that the group will move to the forefront of the technology world over the next few years:
Cyber Security
I am sure we can all think of a recent hacking scandal that has targeted a financial institution, movie studio or retail store over the past few months. And as more and more data goes online and into computers the need to secure this information will increase if only to prevent some of the recent public relations disasters from happening again.
This market has really exploded in just the past decade, moving from a niche industry to something that every company needs to consider. In fact, some analysts expect the market to grow at a compound annual growth rate of over 10% until the end of the decade, reaching a value of over $150 billion.
And as the sector grows in importance we could see plenty of merger and acquisition activity too. A wave here similar to what we have seen in the pharma industry isn’t out of the question as larger companies move to expand their offerings and give consumers and businesses more of a one-stop shop for cyber security issues.
How to Play? PureFunds ISE Cyber Security ETF (HACK – ETF report)
Although many new ETFs struggle to amass assets in a timely manner, this certainly hasn’t been the case for HACK. The fund was launched in November of 2014 and it is already one of the more popular ETFs in the tech space and closing in on the half a billion asset level.
The fund follows the ISE Cyber Security Index, giving exposure to about 30 companies in the up-and-coming space. Firms included either have to be in the cyber security infrastructure or service segments, though there is a heavy focus on infrastructure-related companies. The fund does take a modified equal weight approach, so no single company is going to dominate the risk/return profile of the benchmark (read 3 ETFs Leading the Technology Sector Surge).
