From Bitcoin to electric vehicles to solar power and beyond, tracking hot stocks in the so-called “new economy” can seem an overwhelming task.
Several exchange traded funds can help investors keep up with and gain exposure to such innovative companies. SPDR S&P Kensho New Economies Composite (KOMP) is one of the ETFs that aims to do just that.
The $2.2 billion fund tracks an index that uses artificial intelligence and quantitative weighting to select innovative companies poised to disrupt traditional industries. The so-called “new economies” stocks tend to focus on increased processing power, robotics, AI and automation.
KOMP, which marks its third anniversary in October, holds 406 stocks. The weighted average market cap of companies in the portfolio is $74.8 billion. Morningstar Inc. classifies the ETF as a midcap growth fund.
Semiconductors and application software were the two biggest sector weights as of Wednesday, at just north of a respective 8% and 7%. Consumer electronics, automakers, and aerospace and defense accounted for 5% to 6% apiece.
Bitcoin Miner Among Hot Stocks
Top holdings include hot stocks in the small to midcap range such as Vuzix (VUZI), Riot Blockchain (RIOT), MicroVision (MVIS), 3D Systems (DDD) and Blink Charging (BLNK). Four of these have scored tripled-digit gains this year.
Heading into Friday, laser scanning technology company MicroVision led with a 235% gain. Smart glasses maker Vuzix rallied 161%, Bitcoin miner Riot Blockchain 137% and 3D Systems 110%. But Blink Charging, which provides electric vehicle charging gear and services, was down 11%.
The ETF is working on a consolidation with a 76.86 buy point, according to MarketSmith chart analysis. It’s about 12% away from the entry. KOMP is testing support at its 10-week moving average. A solid rebound off the line can also set up a buy opportunity.
KOMP held a year-to-date gain of almost 18% through Thursday’s close, outpacing the S&P 500’s 12% return. SPDR S&P Kensho New Economies charges a 0.2% expense ratio.
Rob Lutts, founder of Cabot Wealth Management, recently named KOMP one of his top ETF picks.
“The Kensho group is a unique research company that finds these companies by doing artificial intelligence searches, and they put them through their screens to determine whether they really are a place they should be investing in,” Lutts told IBD. “So, they have a lot of new-on-the-spectrum companies that are just getting going.”
Follow Nancy Gondo on Twitter at @IBD_NGondo
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