Is there an index fund for tech stocks?
NYSEMKT: VGT
The ETF tracks a broad index of U.S. tech companies of all sizes. However, it is a market cap-weighted ETF, so its top holdings make up a larger proportion of its assets.
- SPDR® NYSE Technology ETF.
- SPDR® S&P Semiconductor ETF.
- Technology Select Sector SPDR® ETF.
- Invesco S&P 500® Equal Weight Tech ETF.
- ALPS O'Shares Glbl Internet Gnts ETF.
- SPDR® S&P Software & Services ETF.
- Fidelity® MSCI Information Tech ETF.
Accessed Aug 12, 2022. Actively managed funds often underperform the market, while index funds match it. As a result, passively managed index funds typically bring their investors better returns over the long term. Plus, they cost less, as fees for actively managed investments tend to be higher.
Yes. Invesco QQQ is a passively managed ETF that tracks the Nasdaq-100 index, which contains some of the world's most innovative companies. For more information on the companies that make up the Nasdaq-100 Index, click here.
Information technology stocks currently represent the largest sector of the benchmark S&P 500 Index, comprising just under 29% of the index's value. When you add in communications services stocks, many of which connect with the technology arena, the group represents more than 37% of the S&P 500.
The S&P 500® Information Technology comprises those companies included in the S&P 500 that are classified as members of the GICS® information technology sector.
Fidelity Select Technology Portfolio is no exception, though the fund offers a degree of diversification within this group due to the number of stocks held. As of November 27, 2023, the fund has assets totaling almost $10.62 billion invested in 87 different holdings.
Since the index hit its latest low in October 2022, seven stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — have collectively risen nearly 117 percent, far outpacing the performance of the other 493 companies in the S&P 500. Together, these stocks have become known as the “Magnificent Seven.”
- SPDR S&P 500 ETF Trust.
- iShares Core S&P 500 ETF.
- Schwab S&P 500 Index Fund.
- Shelton NASDAQ-100 Index Direct.
- Invesco QQQ Trust ETF.
- Vanguard Russell 2000 ETF.
- Vanguard Total Stock Market ETF.
- SPDR Dow Jones Industrial Average ETF Trust.
Disadvantages include the lack of downside protection, no choice in index composition, and it cannot beat the market (by definition). To index invest, find an index, find a fund tracking that index, and then find a broker to buy shares in that fund.
Are index funds 100% safe?
While index funds are free from the fund manager bias, they are still vulnerable to the risk of tracking error. It is the extent to which the index fund does not track the index.
While indexes may be low cost and diversified, they prevent seizing opportunities elsewhere. Moreover, indexes do not provide protection from market corrections and crashes when an investor has a lot of exposure to stock index funds.
Compared to its peer group, the QQQ has a relatively low expense ratio of 0.2%, along with a fairly average yield of 0.62%. It also has a long history of outperforming several benchmarks. Over the prior 10 years, for instance, the QQQ has outperformed the S&P 500 by a staggering 186.2%.
VGT - Performance Comparison. In the year-to-date period, QQQ achieves a 3.49% return, which is significantly lower than VGT's 4.01% return. Over the past 10 years, QQQ has underperformed VGT with an annualized return of 18.38%, while VGT has yielded a comparatively higher 20.53% annualized return.
Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund (FXAIX). With a 0.015% expense ratio, this fund is the cheapest one on our list. In addition, the fund does not have a minimum initial investment requirement, sales loads or trading fees.
Still the strategists said they were staying overweight the U.S. tech sector. They expect the sector's earnings growth to accelerate in the first half of 2024, while economic indicators are also trending higher, and recommended investing in the equal-weighted Nasdaq 100 index (.NDXE) , opens new tab.
Many technology stocks make great growth investments, as illustrated by 2023's rise of artificial intelligence. Numerous tech companies delivered strong revenue gains last year, and the AI market is predicted to enjoy years of growth, expanding from 2023's $208 billion to nearly $2 trillion by 2030.
Tech sector stocks gained more than 50% last year, fueled by AI and signs of improvement in the cloud and chip markets. Upcoming Q4 results could give investors clues into 2024.
S&P 500 will surge all the way to 6,000 in 2025 in 'Roaring 2020s' scenario, says Ed Yardeni.
Because the S&P is capitalization-weighted, superstar companies like Apple and Microsoft have a disproportionately massive impact on the index's performance. Also consider vulnerabilities to sector-specific risks. Most of the S&P 500's gains in 2023 came courtesy of a single sector: technology.
What 7 companies are driving the S&P 500?
Together, Apple, Amazon, Alphabet, NVIDIA, Meta, Microsoft, and Tesla are up around 70% year to date. And if you were to take them out of the S&P 500, the index would be up around 6%.
It has developed sophisticated portfolio construction methodologies and efficient trading strategies that seek to deliver returns that are highly correlated with target portfolio benchmarks. The group has advised Vanguard Information Technology Index Fund since 2004. Advised the fund since 2015.
| Ticker | Name | 5-year return |
|---|---|---|
| SMH | VanEck Semiconductor ETF | 33.31% |
| SOXX | iShares Semiconductor ETF | 31.31% |
| XSD | SPDR S&P Semiconductor ETF | 28.96% |
| PSI | Invesco Semiconductors ETF | 27.97% |
Fidelity® MSCI Information Tech Index ETF. Tracks the performance of the MSCI USA IMI Information Technology 25/50 Index.
| Company/Ticker | Price/Fair Value | Fair Value Uncertainty |
|---|---|---|
| Cognizant Technology Solutions CTSH | 0.80 | Medium |
| Snowflake SNOW | 0.86 | Very High |
| Teradyne TER | 0.64 | High |
