Tariff Relief Boosts Tech ETFs: Is More Upside Ahead?

Wall Street rallied on Monday, buoyed by the hopes that Trump might soften his tariff stance. The S&P 500 snapped out of a four-week losing streak, rising 1.8%, whereas the Dow Jones Industrial Average advanced 1.4%. The tech-heavy Nasdaq Composite Index outperformed with a 2.3% rise, led by technology stocks.

Shares of Tesla TSLA, which have fallen for nine straight weeks, gained nearly 12% on Monday. Meta Platforms META and NVIDIA NVDA each climbed more than 3%. ETFs in the tech space saw smooth trading yesterday. Some of the leading ETFs are Battleshares TSLA vs F ETF ELON, YieldMax MARA Option Income Strategy ETF MARO, Valkyrie Bitcoin Miners ETF WGMI, Global X Blockchain ETF BKCH, and VanEck Vectors Digital Transformation ETF DAPP.

According to Bloomberg News and The Wall Street Journal during the weekend, Donald Trump's administration could hold back from implementing some of his wide-ranging tariff plans and exclude a set of sector-specific tariffs that are on track to be imposed in April. This has eased some concerns over a potential rise in inflation and recession fears. 

On Monday afternoon, President Trump said he may give "a lot of countries breaks" when it comes to reciprocal tariffs, which are expected on April 2.

Promising Tech Growth Outlook

The Fed rate cut has resurfaced. In the latest meeting, the central bank kept its interest rates steady and signaled two rate cuts for this year. As the tech sector relies on borrowing for superior growth, it is cheaper to borrow more money for further initiatives when interest rates are low.

The ongoing boom in artificial intelligence (AI) technology will continue to drive tech stocks. The expansion of AI applications holds the promise of ushering in fresh opportunities for growth within the sector (read: Tech Sector ETFs Set to Rule Under Trump's Second Term?).

The sector outlook remains solid. The global digital shift has accelerated e-commerce for everything, ranging from remote working to entertainment and shopping, thereby bolstering strength in the sector. The rapid adoption of cloud computing, big data, the Internet of Things, wearables, VR headsets, drones, virtual reality, machine learning, digital communication, blockchain and 5G technology will continue to fuel a rally.

If these were not enough, the technology sector has a solid Zacks Sector Rank, being in the top 32%, which suggests continued outperformance in the coming months.

Let us dig into the details of the above-mentioned ETFs.

Battleshares TSLA vs F ETF (ELON) – Up 22.4%

Battleshares TSLA vs F ETF seeks long-term capital appreciation. It offers unique investment opportunities and is the first of its kind. ELON aims to capture the battle between innovation and tradition in the automotive industry by taking targeted positions in two specific companies, one of which the advisor views as a new leader in this industry — Tesla — and one which the advisor views as a legacy leader in this industry — Ford Motor F.

ELON employs a unique investment strategy by establishing a leveraged long position in Tesla, targeting 180-220% of the fund’s net assets, and a leveraged short position in F, targeting 80-120% of the fund’s net assets. This means that ELON will benefit if TSLA’s share price outperforms F’s share price after considering the effects of leverage (read: Is the New Tesla vs. Ford ETF ELON a Game-Changer for Investors?).

ELON has newly debuted in the space this year and has gathered $0.8 million in its asset base. It charges 1.29% in expense ratio.

YieldMax MARA Option Income Strategy ETF (MARO) – Up 12.4%

YieldMax MARA Option Income Strategy ETF seeks exposure to the common stock of MARA Holdings Inc. (MARA), subject to a limit on potential investment gains. It has accumulated $38.6 million in its asset base and charges 99 bps in annual fees.

Valkyrie Bitcoin Miners ETF (WGMI) – Up 10.2%

Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations, and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds nine stocks in its basket, with a double-digit concentration on the top three firms. 

It has amassed $127.1 million in its asset base while trading in an average daily volume of 724,000 shares. WGMI charges 75 bps in annual fees.

Global X Blockchain ETF (BKCH) – Up 9.6%

Global X Blockchain ETF seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware, and blockchain and digital asset integration. Global X Blockchain ETF follows the Solactive Blockchain Index and holds 24 stocks in its basket. It has gathered $127.9 million in its asset base and trades in an average daily volume of 65,000 shares. BKCH charges 50 bps in annual fees (read: ETFs to Buy on Coinbase's Blowout Q4 Earnings).

VanEck Vectors Digital Transformation ETF (DAPP) – Up 7.9%

VanEck Vectors Digital Transformation ETF aims to offer exposure to companies that are at the forefront of digital asset transformation, such as digital asset exchanges, payment gateways, digital asset mining operations, software services, equipment and technology or services to the digital asset operations, digital asset infrastructure businesses or companies facilitating commerce with the use of digital assets. 

VanEck Vectors Digital Transformation ETF tracks the MVIS Global Digital Assets Equity Index and holds 22 securities in its basket. It charges 51 bps in annual fees and trades in an average daily volume of 336,000. DAPP has accumulated $127.9 million in its asset base.

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This article originally published on Zacks Investment Research (zacks.com).

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