Categories: Exchange Traded Funds (ETFs)Technology

ETF Talk: The Ultra-Attractive Tech Sector

Late last month, Apple set a new record as the most valuable company in stock-market history, passing $664 per share. Despite a lukewarm performance since then, this achievement has caused many investors to revisit the tech sector. As a result, one exchange-traded fund (ETF) that you may want to consider is the ProShares Ultra Technology (ROM), which is designed to provide investors with the opportunity to track the performance of technology stocks.

ROM has performed well in 2012. After starting the year at $60.58, the fund rose to hit $88.68 on April 2. As the chart below shows, the fund has been trading in the $80 range lately. It closed at $80.43 on Sept. 4, up 32.77%, year-to-date.

The ProShares Ultra Technology (ROM) ETF seeks daily investment results, before fees and expenses, that correspond to twice the daily performance of the Dow Jones U.S. Technology Index. As of Sept. 4, ROM’s top five holdings were Apple Inc. (AAPL), 24.99%; Microsoft (MSFT), 9.07%; International Business Machine (IBM), 6.67%; Google Inc. (GOOG), 4.64; and Intel Corp. (INTC), 4.15%. The fund continues to sell at a slight premium to its net asset value (NAV) of $80.46 per share.

As indicated, ROM’s primary holdings are giants of the tech industry. The fund’s major holding in AAPL indicates that ROM could be uniquely positioned to capitalize on Apple’s success. However, the fund does present some risk. Because it is entirely invested in technology stocks, the fund’s value is at the mercy of the industry and exposes its investors to losses if the sector sells off. However, if technology stocks continue to perform as they have been, ROM presents a significant investment opportunity.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my ETF Trader service. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You may see your question answered in a future ETF Talk.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/