Many investors looking for long-term growth choose to invest in technology-focused stocks and funds. Buying a tech exchange-traded fund (ETF) is an easy way to invest in technology.
This article will look at some of the best tech ETFs available. If you want to analyze and evaluate ETFs or individual stocks, we highly recommend StockRover. With StockRover, you can easily compare specific stocks or ETFs side-by-side to view past performance. You can also create your own portfolios, run future simulations, and much more.
There are countless ways to use StockRover in your research. One simple way is to view a chart comparing ETFs to see how they’ve performed over a specific period. You can also compare to indexes or specific stocks.
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The purpose of this article is to highlight some ETFs that may be a good fit if you’re looking to invest in technology. This is not investment advice, and it’s possible to lose money with these ETFs. If you have questions about your situation, seek personalized help from a financial professional.
The Best Tech ETFs
Here are some of the top tech ETFs available. You can also use StockRover to find and analyze other ETFs that may interest you.
All of the stats for the funds in this article are from VettaFi and are accurate as of the day of publication, November 17, 2022.
Related: How to Get Free Stocks
1. Vanguard Information Technology ETF (VGT)
VGT tracks the MSCI USA IMI Information Technology 25/50 Index, and is one of the most popular tech-focused ETFs. Even though there are more than 400 securities in the portfolio, VGT is fairly top-heavy, with the top two holdings (Apple and Microsoft) accounting for about 40% of the portfolio.
Most of the assets are invested in large-cap tech stocks, making VGT slightly less volatile than some other tech ETFs. The expense ratio of 0.10% is very low, although not as low as the next ETF we’ll look at.
Expense Ratio: 0.10%
Annual Dividend Yield: 0.63%
1 Year Return: -24.79%
3 Year Return: 48.91%
5 Year Return: 118.12%
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2. Fidelity MSCI Information Technology Index ETF (FTEC)
FTEC may not be the most popular ETF on this list, but it’s worth considering if you’re looking for a low-priced technology ETF. With an expense ratio of just 0.08%, FTEC is enticing.
The fund tracks the MSCI USA IMI Information Technology 25/50 Index, the same index tracked by VGT, but with a slightly lower expense ratio.
This single fund offers exposure to more than 300 different tech stocks with top holdings including Apple, Microsoft, NVIDIA, Visa, and Mastercard.
Expense Ratio: 0.08%
Annual Dividend Yield: 0.60%
1 Year Return: -24.72%
3 Year Return: 49.03%
5 Year Return: 112.43%
3. Technology Select Sector SPDR Fund (XLK)
XLK tracks the Technology Select Sector Index, which includes companies from various industries within the tech sector. This tech sector ETF currently includes about 75 different holdings, with the top two (Microsoft and Apple) accounting for more than 40% of the portfolio.
Because XLK includes companies from several different industries within technology, it’s slightly more diverse than other ETFs that have a narrower focus.
Expense Ratio: 0.10%
Annual Dividend Yield: 0.67%
1 Year Return: -21.30%
3 Year Return: 55.67%
5 Year Return: 122.11%
4. First Trust NASDAQ Technology Dividend ETF (TDIV)
TDIV tracks the NASDAQ Technology Dividend Index, which includes up to 100 technology and telecommunications companies that consistently pay dividends to investors. Each company must have a market capitalization of at least $500 million to be included in the index.
With an expense ratio of 0.50%, TDIV is one of the more costly funds on this list. However, this could be a solid choice if you’re looking to invest in technology while also receiving dividends. The annual dividend yield is the highest of any tech ETF on this list.
If you’re interested in dividends, see our list of the best ETFs with high dividends.
Expense Ratio: 0.50%
Annual Dividend Yield: 1.78%
1 Year Return: -16.43%
3 Year Return: 25.62%
5 Year Return: 62.38%
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5. First Trust NASDAQ Cybersecurity ETF (CIBR)
Cybersecurity is an important part of the technology sector, and its significance continues to increase. CIBR tracks the Nasdaq CEA Cybersecurity Index, so it has a more focused approach than the other ETFs we’ve looked at so far. It also has the highest expense ratio (0.60%) on this list.
CIBR includes about 40 different holdings. There are some household names like Cisco, but also many other companies that are relatively unknown to the average consumer. CIBR attempts to keep the portfolio as diverse as possible since it’s investing in some small and mid-cap companies. As a result, no individual holding accounts for a huge portion of the portfolio.
Expense Ratio: 0.60%
Annual Dividend Yield: 0.11%
1 Year Return: -27.52%
3 Year Return: 38.15%
5 Year Return: 92.68%
6. iShares Semiconductor ETF (SOXX)
SOXX is a niche fund tracking the ICE Semiconductor Sector Index. Since semiconductors are a crucial component of computers and other devices, this is a popular way to invest in technology. United States stocks make up about 75% of SOXX, with international companies accounting for about 25%.
This technology ETF currently includes about 125 securities, including medium and large-cap technology stocks. No individual security accounts for more than 10% of the portfolio, but the top ten holdings account for more than 50% combined.
If you’re bullish on the growth of semiconductors, this iShares ETF could be a good option.
Expense Ratio: 0.40%
Annual Dividend Yield: 0.61%
1 Year Return: -29.78%
3 Year Return: 60.67%
5 Year Return: 122.69%
7. SPDR S&P Semiconductor ETF (XSD)
XSD is another semiconductor ETF, but it tracks the S&P Semiconductor Select Industry. Unlike SOXX, most of XSD’s assets are invested in small and medium-cap stocks. This means it has more potential for growth but is also likely to experience higher volatility.
There are about 50 securities in the portfolio, and no individual security accounts for a large percentage.
Expense Ratio: 0.35%
Annual Dividend Yield: 0.10%
1 Year Return: -27.55%
3 Year Return: 79.00%
5 Year Return: 155.45%
8. iShares Expanded Tech-Software Sector ETF (IGV)
IGV tracks the S&P North American Technology-Software Index. Top holdings include well-known companies like Adobe, Microsoft Corp, Salesforce, Inuit, and Oracle. However, there are also many medium-cap companies included in the portfolio.
Some of the top holdings, Microsoft in particular, are also included in the more diversified tech ETFs, while this one takes a niche approach focusing on software.
Expense Ratio: 0.40%
Annual Dividend Yield: N/A%
1 Year Return: -39.70%
3 Year Return: 20.38%
5 Year Return: 74.80%
9. Invesco QQQ ETF (QQQ)
Although it’s not 100% focused on tech stocks, Invesco’s QQQ has a heavy emphasis on technology by tracking the NASDAQ 100. It’s one of the most popular ETFs among investors.
QQQ is a relatively top-heavy fund with the top ten holdings currently accounting for more than 50% of the portfolio. Those holdings include Apple Inc, Microsoft, Amazon, Tesla, and Alphabet Inc (Google), among others.
Currently, there are about 100 different holdings in the portfolio. Although this number is lower than what you’ll find with some other ETFs, QQQ does provide some level of diversification since it’s not 100% tech-focused. The expense ratio of 0.20% is low but not as low as some others on this list.
Expense Ratio: 0.20%
Annual Dividend Yield: 0.45%
1 Year Return: -27.73%
3 Year Return: 43.38%
5 Year Return: 93.84%
Final Thoughts on the Best Tech ETFs
If you’re looking to invest in technology, one of the easiest ways to do it is by purchasing a technology ETF. You’ll get more diversification than you would get by buying a single tech stock, and there are a wide variety of options available. We’ve covered some of the best tech ETFs here, and you can use StockRover to do your own research and analysis of ETFs and the stock market.
For more ETFs, please see:
- Best ETFs for Long-Term Investors
- Best Commodity ETFs
- Best Energy ETFs
- Best ETFs with High Dividends
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