The technology sector has been on fire this year thanks to improving economic and industry fundamentals, a rising interest rate scenario, and Trump’s proposed corporate tax reform. The sector is leading the broad market rally with the ultra-popular Select Sector SPDR Technology ETF XLK gaining 15.1% in the year-to-date timeframe versus the gain of 7.2% for SPDR S&P 500 SPY).Below we discuss some strong reasons for the outstanding performance of the sector and their continued outperformance.Encouraging FundamentalsMost of the surge came from five technology giants – Amazon AMZN, Apple AAPL, Microsoft MSFT), Alphabet GOOGL and Facebook FB – that collectively account for 40% weight in the index. These stocks are scaling new highs this year and are the major beneficiaries of Trump's proposed policies, especially the tax reform, which could allow companies to bring back cash being held overseas at lower rates. Investors should note that 84% of the technology stocks have delivered positive returns this year (read: 4 High-Flying ETFs & Stocks with More Room to Run).Additionally, the emergence of new technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones and virtual reality devices are fueling growth in the sector. With the global economy gathering momentum, technology companies are likely to outperform and are less susceptible to interest rates or deregulation.Further, most of the tech companies are sitting on a huge cash pile 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 in a rising interest rate environment. Adding to the strength is a pick-up in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle.Massive Fund FlowInvestor’s appetite for tech stocks remains strong as money has been flowing into the sector at a faster clip in the last 15 years. The stocks saw solid inflows of about $1 billion in the past week while tech-focused mutual funds and ETFs have gathered new money for 11 consecutive weeks and pulled in about $8.7 billion in capital this year, according to a Bank of America Merrill Lynch report. Notably, XLK saw inflows of $1.4 billion this year compared with outflows of over $11 billion for SPY.Bullish BetsHedge funds are betting heavily on popular technology and Internet stocks, as per the Goldman Sachs Hedge Fund Trend Monitor. Their bullish bets soared to post-crisis highs during the first quarter. The so-called FAANG stocks (Facebook, Amazon, Apple, Netflix and Google parent Alphabet), which are among the top 10 holdings of most hedge funds portfolio, saw gross and net exposure jump to post-crisis highs of 230% and 73%, respectively.Earnings StrengthThe rally in the sector is supported by its strong earnings expansion in the S&P 500 index, excluding energy, as tech is one of the leading sectors of the S&P 500's profit growth resurgence. This is especially true given that the sector is expected to post earnings growth of 8.3% for this year, a remarkable markup from 1.7% reported in 2016. In comparison, earnings for the S&P 500 index, excluding energy, are expected to grow 4.8% (read: 6 Hot ETF Charts of Q1 Earnings Season).Solid Zacks RankThe upside is further confirmed by the Zacks Sector Rank in the top 38% with about 62% of the industries having their ranking in the top 41%. This suggests continued outperformance in the sector for the coming months. Semiconductors and electronics topped the list.How to Play?In view of the reasons discussed above, we strongly believe that investors should consider technology ETFs and stocks in their portfolio. While most of the ETFs & stocks are skyrocketing, we have highlighted five that will continue their outperformance in the coming months as well:ETFs to ConsiderFor ETFs, we have focused on either of the two factors: Zacks Rank of #1 (Strong Buy) or #2 (Buy), or the uprising theme. Any of these would continue to show their uptrend.ARK Innovation ETF ARKKThis actively managed fund offers exposure to companies that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the genomic, industrial innovation or Web x.0 (read: 5 Hottest Tech ETFs of 2017).Zacks Rank: NAAUM: $28.2 millionExpense Ratio: 0.75%YTD Return: 36.4%ARK Web x.0 ETF ARKWThis is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure from hardware and software to cloud.Zacks Rank: NAAUM: $29.4 millionExpense Ratio: 0.75%YTD Return: 32.6%PureFunds Video Game Tech ETF GAMRThis fund targets the global video game industry of the technology sector including game developers, console and chip manufacturers, and game retailers.Zacks Rank: NAAUM: $11.8 millionExpense Ratio: 0.75%YTD Return: 32.4%PowerShares Dynamic Semiconductors Fund PSIThis fund targets the semiconductor industry of the broad technology sector.Zacks Rank: #1AUM: $262.5 millionExpense Ratio: 0.63%YTD Return: 22.6%First Trust NASDAQ-100-Technology Sector Index Fund QTECThis ETF offers equal weight exposure to the tech companies in the NASDAQ-100 Index (see: all the Technology ETFs here).Zacks Rank: #2AUM: $2.1 billionExpense Ratio: 0.60%YTD Return: 21.5%Stocks to ConsiderTo pick the stocks in the sector, we have used the Zacks Stock Screener. We narrowed down the list by selecting stocks with a Zacks Rank #1 or #2, a VGM Style Score of A or B, and Zacks Industry Rank in the top 41%.Ultra Clean Holdings Inc. UCTTThis California-based company is a developer and supplier of critical subsystems for the semiconductor capital equipment, flat panel, solar and medical device industries. Zacks Rank: #2VGM Style Score: AMarket Cap: $722.4 millionYTD Return: 131.2%Kemet Corporation KEMThis South Carolina-based company is the world's largest manufacturer of solid tantalum capacitors and one of the world's largest manufacturer of multilayer ceramic capacitor.Zacks Rank: #2VGM Style Score: AMarket Cap: $616.2 millionYTD Return: 96%Autohome Inc. ATHMThis China-based company offers an online destination for automobile consumers primarily in the People's Republic of China.Zacks Rank: #2VGM Style Score: BMarket Cap: $4.95 billionYTD Return: 68.1%Applied Materials Inc. AMATThis California-based company develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry (read: Semiconductor ETFs Leading Tech Sector on Q1 Earnings).Zacks Rank: #1VGM Style Score: BMarket Cap: $47.6 billionYTD Return: 38.7%You can see the complete list of today’s Zacks #1 Rank stocks here.Western Digital Corporation WDCThis California-based company designs, develops, manufactures and markets a broad line of hard drives featuring leading-edge technology.Zacks Rank: #1VGM Style Score: AMarket Cap: $25.6 billionYTD Return: 29.5%Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis Report Ultra Clean Holdings, Inc. (UCTT): Free Stock Analysis Report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Facebook, Inc. (FB): Free Stock Analysis Report Autohome Inc. (ATHM): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Kemet Corporation (KEM): Free Stock Analysis Report SPDR-TECH SELS (XLK): ETF Research Reports SPDR-SP 500 TR (SPY): ETF Research Reports PWRSH-DYN SEMI (PSI): ETF Research Reports ARK- WEB XO ETF (ARKW): ETF Research Reports ARK-INNOVATION (ARKK): ETF Research Reports FIRST N-100 TEC (QTEC): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report