Investment Profile: American Innovators


Call us the United States of Innovation. Think of Thomas Edison and his inventions of the lightbulb and the phonograph. George Westinghouse, a pioneer in electricity. Henry Ford who created the first moving assembly line for mass-produced cars.

Even our movie stars are innovators: Back in the 1940’s, the brainy screen siren Hedy Lamarr invented “spread spectrum technology,” which would later make her the “mother of Wi-Fi.

The same genius is alive and well today, especially in the technology world.

As the chief executive of Apple, Steve Jobs created society-altering devices such as the iPhone and iPad. Elon Musk, who helped revolutionized online payments with Paypal, is hard at work producing electric cars today; and Jeff Bezos, who helped transform the way we shop with Amazon, is reinventing package delivery by using drones.

With all this in mind, you may want to consider investing in today’s revolutionary technology companies. And the American Innovators ETF can help you do that.

Why invest in American Innovators?

Not only does technology create the latest and greatest new gadgets and breakthroughs, many are fast-growth companies that power the economy. The tech industry is responsible for nearly 50% of all new jobs.

In fact, the U.S. tech industry employs 6.9 million people and contributes about $1.3 trillion to the economy.

In coming years we’re likely to see advances in driverless cars, robotics, virtual and augmented reality, virtual currency, and Internet-enabled devices, to name just a few areas.

In recent years, the technology sector has shown amazing strength and resilience as the U.S. struggled to emerge from the financial crisis. Tech continues to show significant potential for the future, according to various reports.

Microsoft has developed its Onsight software in collaboration with NASA’s jet propulsion lab. This hololens software lets scientists be virtually present to conduct experiments as if their space boots were actually on another planet. Google is making big moves with self-driving cars, cloud computing, artificial intelligence and more. Amazon is changing the way we buy and sell everything from clothing to organic food.

American Innovators: What’s inside the fund?

You’ll find many of the largest and most cutting edge technology companies in the world like Apple, Microsoft, Facebook, Alphabet (the parent company of Google), Intel, and IBM.

But there are also holdings that represent more traditional business and technology niches including consulting giant Accenture, and payroll processing and human resources outsourcer Paychex.

What are the risks?

American Innovators is a sector-specific fund. That means the fund’s performance largely depends – for better or for worse – on the performance of the tech industry. And the tech industry can be volatile, or subject to abrupt changes in value.

This is important to keep in mind, especially this year as it’s seemed that tech stocks have only increase in value. But tech stocks can also go down–look no further than their performance in 2015 when world events caused a sharp selloff, if you want to get a sense of how volatile the sector can be.

Recommended reading: What The Recent Tech Sell-Off Teaches Us About Diversification

More details about this fund

It’s underlying fund is Vanguard Information Technology ETF. This fund offers you exposure to 365 technology companies that are changing the way we live and work. Check them out here.

This investment tracks a benchmark index that measures the total return of stocks in the IT sector. And less active management equals lower fees: this fund has an expense ratio of only 0.10%, which is low in the industry.

This fund historically paid dividends as these tech behemoths tend to dole out cash to their shareholders on a quarterly basis.

Key takeaways

  • The tech sector is where the bulk of innovation happens today and can offer promise for investors looking for growth.
  • Investing in American Innovators means making a bet on an industry sector, rather than a broad mix of funds.
  • In you invest in American Innovators, be sure to diversify your portfolio to balance out your risk.
  • American Innovators may be for you if you geek out over connecting your home to the Internet, or the specs of your new device, or simply the prospect of investing where innovation happens.

Other investments like this

If investing in technology interests you, you may also like:

Wireless Wonders: telecom companies, connecting our world

Internet Titans:  Invest in the potential of the internet.

Social Media Mania: the leading companies in social media, ecommerce, and online and mobile gaming.

Recommended reading: Insights From Mary Meeker: Why Tech is Still Killing It in 2017 







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