A fair number of ETFs tracking the technology sector are not starved for attention and a lot of that has to do with the large allocations to bellwether tech names such as Apple Inc. (NASDAQ:AAPL) found within those funds.
However, a previously vilified tech ETF with scant Apple exposure has turned in an impressive 2012 performance. That fund is the First Trust Exchange-Traded Fund II (NASDAQ:SKYY). When First Trust Exchange-Traded Fund II (NASDAQ:SKYY) debuted in July 2011, the ETF had its share of critics, some of which questioned the validity of such a narrowly focused ETF.
Out of the gate, First Trust Exchange-Traded Fund II (NASDAQ:SKYY) proved those critics correct, tumbling from a debut price of $20 to $16. It appears First Trust Exchange-Traded Fund II (NASDAQ:SKYY) is having the last laugh as the fund has jumped 16.5 percent year-to-date. As Street One Financial points out in a research note, First Trust Exchange-Traded Fund II (NASDAQ:SKYY) is home to 42 stocks and uses and equal-weight methodology.
Yes, Apple is included in First Trust Exchange-Traded Fund II (NASDAQ:SKYY)’s lineup, but with a weight of just 2.07 percent, the stock is the ETF’s 25th-largest holding. A sampling of the names that figure more prominently in First Trust Exchange-Traded Fund II (NASDAQ:SKYY)’s lineup include Rackspace Hosting, Inc. (NYSE:RAX), Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG).
The exposure to cloud plays such as Google and Netflix lends First Trust Exchange-Traded Fund II (NASDAQ:SKYY) to being a play on the booming smartphone industry as well.
“Users of smartphones no doubt have figured out that the stability and usability of their ‘apps’ depends on network/server conditions, and ‘cloud’ based programs such as ‘Google Play’ and ‘Netflix Streaming’ have become increasingly popular among users,” according to Street One.
First Trust Exchange-Traded Fund II (NASDAQ:SKYY) has proven detractors wrong on another front, that being its ability to attract assets. The ETF’s AUM total has swelled by more than 25 percent in the past year and now stands at almost $76 million.
The asset growth has come quietly as has First Trust Exchange-Traded Fund II (NASDAQ:SKYY)’s impressive year-to-date performance. Quiet or not, it is worth noting that First Trust Exchange-Traded Fund II (NASDAQ:SKYY) has sharply outperformed the Technology SPDR (NYSEARCA:XLK), the Vanguard Information Technology (NYSEARCA:VGT) and the iShares Dow Jones US Technology (NYSEARCA:IYW) this year. Those ETFs have an average allocation of 19.4 percent to Apple, indicating First Trust Exchange-Traded Fund II (NASDAQ:SKYY) has not needed the iPad maker to drive its returns in 2012.
This article was originally written by The ETF Professor, and posted on Benzinga.
