10 Great Tech ETFs to Buy Now
Aug. 31, 2018
Most investors are fascinated with tech stocks. And why not? The information technology segment is the largest group within the S&P 500 index, with $9.8 trillion of the benchmark’s overall $46.6 trillion in market cap – good for more than 20 percent of its value.
Whether its mega corporations like Apple (ticker: AAPL) or Amazon.com (AMZN) or small upstarts in emerging fields like cybersecurity and cloud computing, there’s always a big story somewhere in tech. There are a host of technology-focused ETFs out there, including both broad-based funds for diversified investors and tactical funds for those looking to play a more focused slice of the sector.
1. Technology Select Sector SPDR Fund (XLK). This broad technology ETF is one of the most popular ways to play the sector among all ETFs, with a massive $22 billion under management. Including both the technology and telecom segments of the S&P 500, the 75 components are a who’s who list of the industry with the top of the list including Apple, Microsoft Corp. (MSFT) and Facebook (FB).
Keep in mind, however, that this fund is weighted heavily toward Apple, which represents a staggering 16 percent of the portfolio. This bias is good when big stocks like these are doing well, but can be risky if things take a turn for the worse.
2. Vanguard Information Technology ETF (VGT). Right beside the XLK is this Vanguard technology sector play that consists mostly of the same stocks, and also boasts more than $20 billion in total assets. However, there are a few subtle differences in the makeup of this fund – such as a more robust list of about 350 picks and the inclusion of payments processors Visa (V) and MasterCard (MA) in the top seven holdings.
And as is typical of a Vanguard fund, the expenses are dirt-cheap at just 0.1 percent annually, or $10 on every $10,000 invested. That’s a small price to pay for a one-stop shop. – Jeff Reeves
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