Top 10 largest technology ETFs: Riding the tech wave

Top 10 largest technology ETFs200degrees / Pixabay

Technology companies are dominating the stock market, and of course, the world. With the rise of artificial intelligence, machine learning, and other futuristic technologies, tech companies are expected to play an even bigger role in our lives. If you are bullish on the tech sector, technology ETFs are one of the simplest and easiest ways to gain exposure to a broad range of tech companies. Here we take a look at the top 10 largest technology ETFs listed in the US.

Technology ETFs invest in the stocks of companies providing technology hardware, software, and services. They include Apple, Amazon, Facebook, Microsoft, Cisco, Nvidia, and more. Some tech ETFs also have medical devices stocks in their portfolio.

There are more than 80 technology ETFs in the US. When investing in ETFs, you should look at their assets under management (AUM), trading volumes, and expense ratios besides the index they track. ETFs with lower AUMs and trading volumes tend to have a wider spread, meaning there are huge swings in prices. A higher AUM also minimizes the tracking error. For these reasons, it makes sense to invest in one of the largest technology ETFs.

An ETF tracks a benchmark index. Instead of outperforming the index, the ETF aims to match its performance. ETFs are listed on a stock exchange and trade like a regular stock. You can trade shares of an ETF throughout the trading day. But this ability to buy and sell shares throughout the day could shift your focus from long-term investing to short-term gains.

Ranked: The ten largest technology ETFs

These are the top 10 largest ETFs based on their assets under management as of February 2020. The ranking is based on data from ETFdb.com.

10- KraneShares CSI China Internet ETF (KWEB), $2.6 billion

With $2.6 billion in assets, KWEB invests in China-based technology companies listed in both the US and Hong Kong. It gives you exposure to companies that benefit from China’s massive market and a growing middle-class. Some of its largest holdings are Alibaba, Tencent, Meituan Dianping, and Baidu. It has an expense ratio of 0.76%, higher than any other ETF on this list.

9- First Trust NASDAQ 100 Tech Sector ETF (QTEC), $2.8 billion

The First Trust NASDAQ-100-Tech Sector ETF mimics the performance of the NASDAQ-100 Technology Sector Index. It’s an equal-weighted index comprising of Nasdaq-listed technology companies such as Apple, Amazon, Netflix, and others. Launched in 2006, QTEC has an expense ratio of 0.57%.

8- iShares Global Tech ETF (IXN), $3.2 billion

Launched in 2001, IXN has nearly two decades of track record. Its expense ratio is 0.46%. It tracks the S&P Global 1200 Information Technology Sector Index, giving you exposure to global IT, hardware, software, and electronics companies. It has delivered an impressive annualized return of 15.34% over the last decade.

7- iShares Expanded Tech-Software Sector ETF (IGV), $3.3 billion

IGV is designed to track the S&P North American Expanded Technology Software Index. Its total expense ratio is 0.46% and AUM is $3.3 billion. IGV invests primarily in the stocks of software, interactive media, and related companies. Its largest holdings are Adobe, Microsoft, Salesforce, Oracle, and Intuit.

6- Fidelity MSCI Information Technology Index ETF (FTEC), $3.39 billion

At just 0.08%, FTEC has the lowest expense ratio of any ETF on this list. It tracks the performance of the MSCI USA IMI Information Technology index. It invests in the US-based information technology companies. Its largest holdings are Apple, Microsoft, Visa, and Mastercard. FTEC has a total of 320 stocks in its portfolio, but the top ten stocks have more than 58% weightage.

5- iShares U.S. Technology ETF (IYW), $4.8 billion

Launched in 2000, IYW tracks the performance of the Dow Jones U.S. Technology Capped Index. The ETF has $4.8 billion in assets. Its expense ratio is 0.42%.  IYW invests primarily in the US technology stocks. Its largest holdings are Microsoft, Apple, Google, Facebook, and Intel. The ETF has delivered an impressive 18.54% annualized return over the last five years.

4- First Trust Dow Jones Internet Index ETF (FDN), $7.8 billion

FDN is the fourth largest technology ETF with $7.8 billion in assets. Its expense ratio is 0.52%. It tracks the performance of Dow Jones Internet Composite Index, which consists of 40 most-traded and largest US internet stocks. Its largest holdings are Amazon, Facebook, Netflix, Salesforce, and Paypal.

3- Vanguard Information Technology ETF (VGT), $26.3 billion

Just like most other Vanguard funds, VGT has a pretty low expense ratio of just 0.10%. It tracks the performance of the MSCI US IMI Information Technology 25/50 Index. It has invested in more than 300 US technology stocks. VGT’s largest holdings are Apple, Microsoft, Visa, Mastercard, and Intel. The top ten holdings have a staggering 57.8% weightage in its portfolio.

2- Technology Select Sector SPDR Fund (XLK), $26.7 billion

XLK is one of the most popular technology ETFs among the American investors. Launched in 1998, the ETF has an expense ratio of just 0.13%. It tracks the performance of the Technology Select Sector Index, which represents the technology and telecom sectors within the S&P 500 index. The ETF gives you exposure to technology hardware, software, communications, semiconductors, and IT services companies.

1- Invesco QQQ ETF (QQQ), $90.6 billion

Founded in 1999, Invesco QQQ ETF has more than $90 billion in assets. It tracks the performance of NASDAQ 100 Index, which includes 100 of the largest non-financial stocks listed on NASDAQ. Its largest holdings are Apple, Microsoft, Intel, Cisco, and Adobe. It has significantly outperformed the S&P 500 index over the last decade.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com or on Twitter @VikShukla10

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