The best business growth and most promising potential returns in tech are being generated by the innovators, what money manager Rob Lutts calls “new tech.”
New tech is not easily categorized but generally consists of stocks involved in cloud computing, smartphones and software designed to enhance productivity.
One way to tap this innovation is throughPowerShares S&P SmallCap Information Technology, which tracks tech stocks such as recruiting software maker Taleo in the early stages of development.
The First Trust NASDAQ CEA Smartphone Index Fund, which equal weights about 70 stocks related to high-end cell phones, is another way to capture what’s working today.
While a bit pricey (its expense ratio is 0.70 percent), the ETF includes good coverage of international and small-cap firms.
Another new-tech play is, of course, Apple .
The industry powerhouse and world’s most valuable company dwarfs its nearest competitor by market cap, profitability and cash — to name just a few metrics.
Apple dominates the weighting of most broad tech ETFs, so if you’re bullish on the stock, it makes sense to own an ETF with a pronounced Apple weighting (18 percent) such as Vanguard Information Technology.
Apple’s reliance on hundreds of suppliers makes semiconductors another part of the tech bellwether. SPDR S&P Semiconductor offers the most diversified exposure to the chip sector.