The technology industry is worth trillions on a global scale, and many want a piece of the pie. Technology exchange-traded funds (ETFs) offer investors a way to tap into that wealth.
The technology space is huge, and breakthrough innovations in artificial intelligence, cloud computing, fintech, robotics and other industries are adding further growth opportunities to this market.
However, tech is also a highly competitive landscape, and emerging technology companies that are here today might be gone tomorrow. The volatile nature of this space can make investing in technology stocks a risky gamble.
Technology ETFs continue to be a popular investment strategy that investors can use to gain exposure to tech stocks. ETFs offer market participants new avenues for stock and bond investing, while providing lower expenses and easier access to the financial services industry.
From value to growth investment styles, many different investment objectives can be targeted using the plethora of technology ETFs available on the market. These investment vehicles provide the option to enter mutual funds or individual technology stocks, or to participate in initial public offerings.
There are 160 technology ETFs, as per data from ETFdb.com. Here the Investing News Network looks at five of the top broad technology ETFs by assets under management; all numbers were current as of May 11, 2023.
1. Invesco QQQ Trust (NASDAQ:QQQ)
Assets under management: US$173.92 billion
The Invesco QQQ Trust offers exposure to tech stocks on the NASDAQ. According to ETFdb.com, this is one of the most popular ETF products. It’s also the second longest-lived product on this list, having launched in 1999.
The ETF has 102 holdings, including Microsoft (NASDAQ:MSFT) at a weight of 13.35 percent, Apple (NASDAQ:AAPL) at a weight of 12.82 percent and Amazon (NASDAQ:AMZN) at a weight of 6.41 percent.
2. Vanguard Information Technology ETF (ARCA:VGT)
Assets under management: US$46.03 billion
Founded in January 2004, the Vanguard Information Technology ETF has a diverse portfolio, with a focus on small- and micro-cap stocks, as well as large-cap companies.
This tech ETF has 366 holdings, with Apple weighing in on top at 22.77 percent. Microsoft takes up 18.05 percent of the fund, followed by NVIDIA (NASDAQ:NVDA) at 6.1 percent.
3. Technology Select Sector SPDR Fund (ARCA:XLK)
Assets under management: US$42.93 billion
The Technology Select Sector SPDR Fund holds 66 technology companies and is the most seasoned tech ETF on the list, having begun trading in December 1998. Like many of the ETFs on this list, it typically avoids smaller- and mid-cap companies and instead focuses on the big names in the technology sector.
Its top holdings are Microsoft at 24.73 percent, Apple at 24.21 percent and NVIDIA at 4.67 percent.
4. ARK Innovation ETF (ARCA:ARKK)
Assets under management: US$7.21 billion
The ARK Innovation ETF began in October 2014 and has 28 holdings. According to ETFdb.com, “The stated goal of ARKK is to invest in companies that are poised to profit from ‘disruptive innovation’ like artificial intelligence, DNA technologies, energy innovation, automation, financial technology and the increased use in cloud computing.”
The fund’s top holdings differ widely from its peers. Tesla (NASDAQ:TSLA) weighs in at 9.82 percent, followed by Zoom (NASDAQ:ZM) at 7.33 percent and Roku (NASDAQ:ROKU) at 7.15 percent.
5. Fidelity MSCI Information Technology Index ETF (ARCA:FTEC)
Assets under management: US$6.09 billion
The Fidelity MSCI Information Technology Index ETF was launched in October 2013 and has 359 holdings. At least 80 percent of its holdings are securities included in the MSCI USA IMI Information Technology Index, “which represents the performance of the information technology sector in the U.S. equity market.”
The fund’s top holdings include Apple with a weight of 23.74 percent, followed by Microsoft at 19.4 percent and NVIDIA at 6.29 percent.
This is an updated version of an article first published by the Investing News Network in 2018.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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