The tech sector went crazy in the last bull run speeding past the S&P 500. There are so many great tech stocks, and sometimes you want to choose all of them. It can take much work to determine which tech stocks to choose from.
If you are looking for a sound tech stock, you should start with some tech ETFs, and exchange-traded funds. Here is a list of the 5 best tech ETFs to load up on some tech stocks in 2023.
Why Should You Buy Tech ETFs?
The tech sector is full of companies that create new technology from software, social media, electronics, and internet companies. These companies are usually considered more growth companies because they invest their profits into research and development to create more technology. These companies include Microsoft, Apple, Google, Amazon, and Visa.
Technology companies need to give out more dividends like SCHD, a dividend growth ETF. They are using their money to grow their business. People have taken notice. Technology is now touching every aspect of our lives. From the internet to how we buy things to the technology people use in their businesses. It is a part of our lives now so technology stocks can be a part of your portfolio.
The S&P 500 has many tech stocks that are a part of it, and you can own the S&P 500 through ETFs like SPY or VOO. If you are looking for a more significant concentration of these tech companies, you can pick one of these 5 best tech ETFs that should help you on your way.
The 5 Best Tech ETFs
Here are the 5 best tech ETFs to help you buy tech stocks.
VGT- Vanguard Information Technology ETF
VGT is one of the market's most popular and largest Tech ETFs. It is a Vanguard ETF that tracks the MSCI U.S. IMI 25/50 Information Technology index. It holds 374 different stocks with a market cap of over $42 billion in assets. It provides broad exposure to most technology companies in the U.S. (except Amazon) and has an expense ratio of 0.10%, making it a very affordable ETF to add to your portfolio.
QQQ- Invesco Trust QQQ
Invesco Trust QQQ is the most popular tech ETF on this list. It is ranked as the market's second most-traded ETF. SPY, the oldest ETF, is the largest and most traded. QQQ seeks to mirror the Nasdaq 100. It is considered a tech ETF because of the large concentration of tech stocks on the Nasdaq 100. It has an expense ratio of 0.15% and gives you 100% of the same holdings as QQQ. It does have an expense ratio of 0.20%, but if you want a cheaper version go with QQQM.
FTEC- Fidelity MSCI Information Technology ETF
FTEC is the Fidelity version of VGT. They track the same index, but FTEC is a much smaller ETF with about $5 Billion in assets. Its expense ratio is 0.08% making it a more affordable option than VGT. It is just not as liquid as QQQ or VGT.
XLK- Technology Select Sector SPDR Fund
XLK is a Tech ETF from State Street that is more focused on large-cap tech stocks. It was created in 1998 and now has over $41 billion in assets. It holds 76 different stocks from the S&P 500 and has an expense ratio of 0.10%, like VGT. It has a very concentrated, 42% combined, of the fund sitting in both Apple and Microsoft, making it prone to volatility. If you are looking for a tech ETF that is all large-cap stocks, then XLK is a great ETF to hold in your portfolio.
SMH- VanEck Semiconductor ETF
SMH is a tech ETF that focuses on semiconductors and microchips. With about $7.8 billion in assets, it has a good amount of backing. It is very concentrated as it only holds 25 different stocks, and TSMC and Nvidia make up 18% of the entire fund. The expense ratio of 0.35% makes it one of the more expensive ETFs on this list, but if you are looking to get into more exposure for Semiconductors, then SMH is a great ETF to hold.
Each of these tech ETFs offers investors an opportunity to have a larger piece of tech within their portfolio. As technology increases from AI to the internet to online stores, it would be nice to have a small amount of them as they grow. These tech ETFs give you the ability to hold a more significant concentration. Start loading up on some tech with these great tech ETFs.
I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.