Your Grandparents Would Like This Tech Fund

By Tom Lydon, ETFTrends

With the Nasdaq faltering recently, it might be hard for some investors to believe that things are not entirely gloom and doom in the technology sector.

Most of the gloom has come courtesy of once high-flying Internet and social media stocks.

Not all technology sector funds are wearing scarlet letters though. While not much too write home about, more conservatively-positioned tech ETFs have been sturdy in recent weeks.

A standout has been the First Trust NASDAQ Technology Dividend Index Fund (TDIV), which was sporting one-month gain of nearly 3% entering early this week.  A large part of the reason TDIV has been sturdy as higher beta tech fare has withered is the funds allocations to the sector’s more mature names.

Think Dow components Microsoft, International Business Machines, Intel and Cisco. Those are four of the 14 Dow stocks that are higher year-to-date. Those are TDIV’s four largest holdings, combining for a third of the fund'ss weight.

Allocations like those explain “why TDIV has the lowest volatility of the 36 tech funds and is about half as volatile,” writes Eric Balchunas for Bloomberg.

While the concept of dividend growth in the tech sector is still relatively new, that does not mean it will not prove rewarding for investors. The sector is one of largest contributors to S&P 500 dividend growth over the past few years and TDIV is up 24.6% since coming to market in August 2014.

Investors have noticed and have poured almost $464 million into the fund.

“TDIV has had a DiMaggio-esque streak of positive inflows for 20 straight months since its August 2012 inception. It even has positive inflows so far in April — a minor miracle given the recent carnage in tech. The flows have been slow and steady, which indicates that smaller (read: more stable) investors are doing the buying. That, plus all the attention social media got, is why TDIV has slipped under the radar and become a sleeper hit,” writes Balchunas.

******

First Trust NASDAQ Technology Dividend Index Fund (TDIV) is a component of the D2 Capital Management Multi-Asset Income Portfolio.  Current dividend yield of the portfolio is 5.43% (as of 15 April 2014).

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.