3 Microsoft-Heavy ETFs To Watch Ahead Of Earnings

In what will be a brisk week of earnings reports from the always widely watched technology sector, the largest sector weight in the S&P 500, Microsoft (NASDAQ: MSFT) is one of the names stepping into the earnings confessional.

Benzinga · 01/27/2020 12:39

In what will be a brisk week of earnings reports from the always widely watched technology sector, the largest sector weight in the S&P 500, Microsoft (NASDAQ: MSFT) is one of the names stepping into the earnings confessional.

The Dow component, one of the blue-chip index's best-performing constituents dating back to the start of 2019, reports on Wednesday.

Investors looking to access the software giant via exchange traded funds often turn to the Technology Select Sector SPDR (NYSE: XLK) and the Invesco QQQ (NASDAQ: QQQ). At a weight north of 19%, XLK has the largest Microsoft allocation among all ETFs.

QQQ, the Nasdaq 100-tracking ETF, is another favored ETF for Microsoft exposure because of its nearly 11% allocation to the stock. For investors looking for other ETF avenues to the high-flying stock, consider the following offerings.

See Also: 3 Classic Tech ETFs to be Tested by Earnings Reports This Week

Fidelity MSCI Information Technology Index ETF (FTEC)

For investors looking to make a long-term commitment to the technology sector with an ETF, the Fidelity MSCI Information Technology Index ETF (NYSE: FTEC) is a great way to go because its 0.084% fee is the lowest among tech all ETFs in this category.

Just three ETFs, including the aforementioned XLK, have larger Microsoft weights than does FTEC. Beyond FTEC's utility as a Micorsoft proxy, the Fidelity fund has other perks, including exposure to the oft-discussed 5G rollout.

“As 5G networks are being built around the world, the network infrastructure and equipment providers, as well as the semiconductor companies that supply them, should benefit most in the near term,” Fidelity said in a recent note. “Once the network reaches critical mass, companies further down the value chain will likely see more benefit: Service providers, handset and other hardware makers (and the semiconductor companies that supply to them), and ultimately providers of applications and software.”

iShares Evolved U.S. Technology ETF (IETC)

The iShares Evolved U.S. Technology ETF (CBOE:IETC) is an actively managed fund designed to deliver a refreshed approach to technology stocks, but that doesn't mean abandoning mature names like Microsoft.

In fact, IETC holds 236 stocks, many of which are older tech fare. That includes the fund's 15.50% Microsoft weight, by far the largest on the IETC roster.

IETC is up 6% to start 2020.

Invesco S&P 500 Momentum ETF (SPMO)

Microsoft is indeed a momentum stock, garnering it a place in the Invesco S&P 500 Momentum ETF (NYSE: SPMO). SPMO follows the S&P 500 Momentum Index, which is comprised of S&P 500 members with favorable momentum traits.

Not surprisingly, that gives the fund an almost 32% weight to tech and Microsoft is its largest holding at 10.15%, or 300 basis points more than the fund's second-largest holding.