Technology stocks are often high risk, high reward: While some go on to become the next Amazon or Apple, others crash and burn. Technology ETFs smooth out some risks by owning a collection of tech stocks rather than just one. This makes it more likely for you to enjoy the benefits of a potential tech stock winner without the risk of tanking your portfolio when a tech stock loser drops out of the race.
Best-performing tech ETFs
Below are the best-performing tech ETFs based on five-year returns.
Ticker | Name | 5-year return |
|---|---|---|
SMH | VanEck Semiconductor ETF | 33.79% |
SOXX | iShares Semiconductor ETF | 30.26% |
PSI | Invesco Semiconductors ETF | 25.72% |
XLK | Technology Select Sector SPDR Fund | 25.12% |
IYW | iShares U.S. Technology ETF | 24.37% |
Source: VettaFi. Data is current as of March 1, 2024. Data is intended for informational purposes only.
What is a tech ETF?
A technology ETF is an exchange-traded fund that invests in companies in the technology sector. Tech ETFs include companies that create and distribute hardware, such as computers, smartphones, semiconductors and other electronics, and software, such as artificial intelligence, cybersecurity and cloud technology.
Why invest in tech ETFs?
Tech ETFs could be an attractive option for investors looking for high growth potential. They may increase your odds of earning higher returns, as you might if you invested in individual tech stocks, but tech ETFs may carry less risk because of diversification.
And while it’s impossible to know if investing in tech will guarantee you massive gains long-term, diversifying the companies in your portfolio through an ETF can help you safeguard against risk.
» Ready to get started? See our roundup of the best online brokers for ETF investing.
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Neither the author nor editor held positions in the aforementioned investments at the time of publication.
