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March 24, 2015, 3:56 p.m. EDT

Morningstar, iShares and Ric Edelman say these are the most innovative stocks

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By Victor Reklaitis, MarketWatch


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NEW YORK (MarketWatch)—A new ETF reveals a sample of what could be the most innovative and disruptive publicly traded companies, at least according to research firm Morningstar, ETF provider iShares and media-savvy financial adviser Ric Edelman.

Those three juggernauts of the investing world have teamed up to launch the iShares Exponential Technologies ETF /zigman2/quotes/210042148/composite XT +1.51% , which began trading Monday.

The exchange-traded fund offers a way to bet on “leaders across key areas of technological transformation—from big data and analytics to nanotechnology and bioinformatics,” said iShares parent BlackRock /zigman2/quotes/207946232/composite BLK +0.49% in a news release Tuesday. Other buzzy areas targeted by the fund include robotics, 3-D printing, neuroscience, financial innovation and environmental systems.

Older ETFs that compete with this new product are offerings from ARK Investment Management and BioShares, plus a medical breakthroughs ETF /zigman2/quotes/208073116/composite SBIO +2.20%  and a robotics ETF /zigman2/quotes/204801386/composite ROBO +2.44% , according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. But the new iShares product is “sort of like a greatest hits collection,” Balchunas told MarketWatch in a tweet. The exponential tech ETF’s launch comes 15 years after the tech-stock crash, as some strategists say this time is different .

Edelman gets credit for the idea behind the ETF. Morningstar /zigman2/quotes/209325896/composite MORN +2.94%  research analysts developed the index that the fund tracks, and they plan to reassess the index at least annually. Edelman’s company likely will put hundreds of millions of dollars into the ETF on behalf of clients, and “moderate-risk” clients might see around 4% of their invested assets go into it, reports Trevor Hunnicutt of Investment News.

The table below shows the exponential tech ETF’s 20 biggest holdings. The ETF’s index is equally weighted at its yearly reconstitution , but for now some components are larger than others, reflecting their performance since the index’s launch. An iShares Web page lists all of the ETF’s roughly 200 holdings, and the ETF’s prospectus features gems such as: “Technologies perceived to displace older technologies or create new markets may not in fact do so.”

Top 20 holdings for ETF that looks for tech’s ‘greatest hits’

Ticker Name Weight (%) Sector Country
PCYC PHARMACYCLICS INC 0.901 Health Care U.S.
USD USD CASH 0.730 Cash and/or Derivatives U.S.
SWKS SKYWORKS SOLUTIONS INC 0.678 Information Technology U.S.
VRX VALEANT PHARMACEUTICALS 0.678 Health Care Canada
FSLR FIRST SOLAR INC 0.667 Information Technology U.S.
SPWR SUNPOWER CORP. 0.662 Information Technology U.S.
MNK MALLINCKRODT PLC 0.638 Health Care U.S.
STM STMICROELECTRONICS NV 0.623 Information Technology France
BMRN BIOMARIN PHARMACEUTICAL INC 0.623 Health Care U.S.
CRL CHARLES RIVER LABORATORIES 0.613 Health Care U.S.
ENDP ENDO INTERNATIONAL PLC 0.612 Health Care U.S.
BIIB BIOGEN IDEC INC 0.611 Health Care U.S.
TMUS T MOBILE US INC 0.606 Telecommunications U.S.
AIR AIRBUS GROUP NV 0.600 Industrials France
PRXL PAREXEL INTERNATIONAL CORP. 0.598 Health Care U.S.
NFLX NETFLIX INC 0.593 Consumer Discretionary U.S.
HOLX HOLOGIC INC. 0.591 Health Care U.S.
LH LABORATORY COP. OF AMERICA 0.586 Health Care U.S.
CTSH COGNIZANT TECHNOLOGY SOLUTIONS 0.585 Information Technology U.S.
AMZN AMAZON.COM INC 0.582 Consumer Discretionary U.S.

Source: iShares.com data as of 3/23/15

/zigman2/quotes/210042148/composite
US : U.S.: Nasdaq
$ 50.31
+0.75 +1.51%
Volume: 225,939
May 19, 2022 2:45p
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/zigman2/quotes/207946232/composite
US : U.S.: NYSE
$ 594.76
+2.90 +0.49%
Volume: 831,828
May 19, 2022 2:46p
P/E Ratio
14.87
Dividend Yield
3.30%
Market Cap
$89.67 billion
Rev. per Employee
$1.10M
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/zigman2/quotes/208073116/composite
US : U.S.: NYSE Arca
$ 26.37
+0.57 +2.20%
Volume: 37,281
May 19, 2022 2:33p
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/zigman2/quotes/204801386/composite
US : U.S.: NYSE Arca
$ 48.83
+1.17 +2.44%
Volume: 46,411
May 19, 2022 2:38p
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/zigman2/quotes/209325896/composite
US : U.S.: Nasdaq
$ 238.05
+6.81 +2.94%
Volume: 75,712
May 19, 2022 2:45p
P/E Ratio
55.87
Dividend Yield
0.61%
Market Cap
$9.88 billion
Rev. per Employee
$184,094
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Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek.

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