Best & Worst Performing Tech ETFs Of 2021

There’s been a sharp divergence in performance between the best- and worst-performing tech ETFs in 2021.

sumit
|
Senior ETF Analyst
|
Reviewed by: Sumit Roy
,
Edited by: Sumit Roy

There has seldom been as much divergence in the technology space as there has been this year.

On the one hand, broad-based tech ETFs, which are heavily weighted toward behemoths like Apple and Microsoft, have performed phenomenally—beating the S&P 500, which itself is up 25.5% year-to-date.

For instance, the iShares U.S. Technology ETF (IYW), which has nearly half its portfolio in just three stocks (Apple, Microsoft and Alphabet), is up 29.8% year-to-date.

On the other hand, narrower tech ETFs, which tend to own stocks of smaller, but faster-growing tech companies, are lagging significantly amid an interest-rate-driven sell-off in high valuation stocks.

Case in point, the ARK Next Generation Internet ETF (ARKW) is down 15.5%. The fund’s top two holdings—Tesla and the Grayscale Bitcoin Trust (GBTC)—have done well this year, but outside of those, everything from Coinbase to Roku to Zoom to Teladoc has been pummeled.

Another Divergence

One divergence in tech this year has been the outperformance in megacaps—the multihundred-billion dollar giants that most people know about—and the underperformance in the smaller stocks in the industry.

Another has been the outperformance in hardware and the underperformance in software. Many of the best-performing tech ETFs this year target semiconductor stocks. The iShares Semiconductor ETF (SOXX), the Invesco Dynamic Semiconductors ETF (PSI) and the VanEck Semiconductor ETF (SMH) are each up more than 34% year-to-date. In fact, they’re the top-performing funds in this survey of the space.

In contrast, software-heavy ETFs, like the Global X Cloud Computing ETF (CLOU) and the Invesco Dynamic Software ETF (PSJ), are mostly down this year.

That said, chipmakers like Nvidia and Advanced Micro Devices, which are both in the top holdings of the three high-flying semiconductor ETFs, have benefited from secular trends in cloud computing, artificial intelligence and gaming.

 

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

 

Of course, software companies are benefiting from many of these same trends. But software stocks did better than hardware stocks last year, so a bit of a reversal isn’t unusual. Additionally, semis are in a particularly good spot this year with all of the supply chain woes that have affected the global economy.

China Tech Stocks Lag

Sticking with the tech divergence theme, there’s been a sharp contrast in the returns for U.S. tech stocks versus Chinese tech stocks.

Broad-based U.S. tech ETFs, like the aforementioned IYW, are up nicely this year. But the equivalent Chinese ETF, such as the Global X MSCI China Information Technology ETF (CHIK), is down a whopping 20.6% year-to-date.

The KraneShares CSI China Internet ETF (KWEB) has been even worse, losing 51.3% of its value this year.

The Chinese government has been cracking down on its technology firms all year long. Its actions have all but wiped out the for-profit education industry in the country, and drastically reined in the powers of the country’s tech giants like Alibaba, Tencent and Didi Chuxing.

So far, there’s no end in sight to the government’s crackdown, so confidence in Chinese tech stocks remains mired at rock-bottom levels.

For a full list of this year’s best- and worst performing tech ETFs, see the tables below:

 

Best-Performing Tech ETFs (ex. leveraged)

TickerFundYTD Return
SOXX iShares Semiconductor ETF35.91%
PSI Invesco Dynamic Semiconductors ETF35.49%
SMH VanEck Semiconductor ETF34.18%
IGN iShares North American Tech-Multimedia Networking ETF33.33%
XSD SPDR S&P Semiconductor ETF33.25%
IYW iShares US Technology ETF29.80%
VCLO Simplify Volt Cloud & Cybersecurity Disruption ETF28.97%
XLK Technology Select Sector SPDR Fund28.31%
QTUM Defiance Quantum ETF28.20%
FTXL First Trust Nasdaq Semiconductor ETF27.89%
JHMT John Hancock Multi-Factor Technology ETF25.07%
IETC iShares Evolved US Technology ETF24.65%
TDIV First Trust NASDAQ Technology Dividend Index Fund24.61%
VGT Vanguard Information Technology ETF24.39%
FTEC Fidelity MSCI Information Technology Index ETF24.34%

 

Worst-Performing Tech ETFs (ex. leveraged)

TickerFundYTD Return
KWEB KraneShares CSI China Internet ETF-51.28%
EMQQ Emerging Markets Internet and Ecommerce ETF-35.62%
KEMQ KraneShares Emerging Markets Consumer Technology Index ETF-29.75%
CQQQ Invesco China Technology ETF-27.78%
CTEC Global X CleanTech ETF-25.71%
FDNI First Trust Dow Jones International Internet ETF-24.40%
CHIK Global X MSCI China Information Technology ETF-20.62%
IPAY ETFMG Prime Mobile Payments ETF-17.50%
ARKW ARK Next Generation Internet ETF-15.45%
PSJ Invesco Dynamic Software ETF-14.58%
XITK SPDR FactSet Innovative Technology ETF-13.83%
FINX Global X FinTech ETF-13.74%
ITEQ BlueStar Israel Technology ETF-12.42%
XWEB SPDR S&P Internet ETF-9.39%
PNQI Invesco Nasdaq Internet ETF-8.88%

Data measures total returns for the year-to-date period through Dec. 20, 2021.

 

Follow Sumit Roy on Twitter @sumitroy2

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.