Trumping bouts of volatility and several crashes, the technology sector has been riding high and is an investors' darling this year. In fact, it is so far the best performing sector of 2015, just behind consumer discretionary. Notably, the S&P 500 Information Technology Sector Index is up nearly 6% versus the gain of 10.10% for the S&P 500 Consumer Discretionary Sector Index and loss of 0.55% for the S&P 500 Index (SPY), as per Fidelity.

Behind the Surge

Most of the gains came from a string of better-than-expected Q3 results from heavyweights such as Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Netflix (NFLX),Linkedln (LNKD) and Facebook (FB) that have injected a strong momentum into the entire sector, pushing many stocks to multi-year highs. A strengthening economy and better job prospects are also giving a solid boost to the economically sensitive growth sectors like technology that typically perform well in a maturing economic cycle (read: 5 Tech ETFs to Watch on Strong Earnings).

As the world is becoming increasingly digital, demand for novel and advanced technologies such as cloud computing, big data, smartphones, high-speed fiber networks and the internet of Things are growing by leaps and bounds. These are creating great opportunities for the tech companies. Further, most of the mature tech companies are sitting on a huge pile of cash and are in a position to increase payouts to their shareholders. The cash reserves will ensure that these companies are not plagued by financial trouble even in a rising interest rate environment.  

While most of the ETFs and stocks are crushing the broader market from a year-to-date look, we have highlighted five from each corner of the space that will continue their outperformance in the coming months:

Best ETFs

First Trust Dow Jones Internet Index (FDN – ETF report) – Up 24.8%

This is one of the popular and liquid ETFs in the broad technology space with AUM of over $4.9 billion and average daily volume of about 600,000 shares. The fund follows the Dow Jones Internet Composite Index and charges 54 bps in fees per year. In total, the fund holds a small basket of 41 securities with double-digit allocation each to Amazon and Facebook. From a sector look, Internet mobile applications account for 40% share, closely followed by Internet retail (23%). The ETF has a Zacks ETF Rank of 2 or ‘Buy' rating with a High risk outlook.

PowerShares Nasdaq Internet Portfolio (PNQI – ETF report) – Up 22.9%

This fund follows the Nasdaq Internet Index, giving investors exposure to 94 stocks. It is heavily concentrated on the top 10 holdings at 61%. Internet software & services makes up for nearly 56% share in the basket while Internet & catalog retail takes 39% share. The product has amassed $292.3 million in its asset base while trades in lower volume of more than 24,000 shares per day on average. Expense ratio came in at 0.60%. PNQI has a Zacks ETF Rank of 2 with a High risk outlook (read: 5 ETF Outperformers with 20% Plus Gains Year to Date).