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Given that the technology space is arguably the single largest driver of innovation and economic growth, investors have been putting more and more of their focus on ETFs with a technology orientation. Such ETFs would then offer an easy, diverse way for an investor can get in on some of the activity within a fast-evolving tech industry. Taking investment and spreading it into many companies is rationalized with the technology ETFs, which help in reducing the risk and at the same time, capturing the gain of the sector.
Here is an in-depth guide to discussing some of the best technology ETFs that you can keep on your radar in 2024, with salient features, performance metrics, and functional benefits.
The Vanguard Information Technology ETF is one of the top technology ETFs to invest in. By class, one of the largest and most popular technology ETFs available. This ETF provides broad-based exposure to the US technology sector and includes almost all types of tech companies, from well-established market giants to innovators.
As of the most recent data, VGT is priced at US$580.01, with a 52-week range of US$519.30 to US$580.01. The fund has had strong returns since most of its components have fared well.
VGT provides a cost-effective way for investors to gain broad exposure to the US technology sector; the ETF has an expense ratio of just 0.10%.
The Technology Select Sector SPDR Fund is another of the top technology ETFs. The company is laser-focused on the technology sector of the S&P 500. It gives exposure to some of the strongest and most pioneering technology companies in the American marketplace.
The best four holdings of XLK are all big tech: Apple, Microsoft, and NVIDIA reflect a strong position by this fund among the sector's leaders.
Currently, XLK is trading at the price of US$223.96, having 52 weeks range of US$205.38 to US$223.96. Fund's performance moves almost the same as its underlying index; that's why it's a credible option for those who want to cash the growth concepts of the highest tech behemoths.
XLK has an expense ratio of 0.12 %, an average of its underlying index which makes this fund a cost-friendly option for seekers of value.
The VanEck Semiconductor ETF is one of the best technology ETFs for 2024 that provides focused exposure to one of the most important subsectors within the broad technology sector the semiconductor industry. Semiconductors are at the heart of enabling artificial intelligence, the Internet of Things, and consumer electronics.
SMH comprises a variety of integral semiconductor companies that occupy center stage in the international technology space, including Taiwan Semiconductor Manufacturing, NVIDIA, and Intel.
SMH is trading at US$248.39, within a 52-week range of US$213.95 to US$251.63. It has put up good returns so far, as its underlying holdings have been buoyed by strong demand from a myriad of industries for semiconductors.
This fund comes with an expense ratio of 0.35%, which, though cheap on an absolute basis, is slightly higher than what investors pay for broader technology ETFs, due to its focused nature.
The iShares US Technology ETF is one major broad-based exposure to US technology companies. It has extensive coverage of US companies in the technology status and is diversified to give exposure across the various sub-sectors in technology. This thus, provides investors with a diversified means of being exposed to the technology sector.
It is major top holdings include such names as Apple, Microsoft, and Alphabet, thereby providing both hardware and software exposure.
IYW is quoting at US$149.38, with a 52-week range of US$133.84- US$149.38. The performance of the fund indicates the overall strength and diversity of the US technology sector.
This fund has an expense ratio of 0.43%, compared to some other broad tech ETFs at a lower expense ratio, helping to provide comprehensive exposure to the US tech market.
The iShares Semiconductor ETF is an alternative fund to SMH for exposure to the Semiconductor sector, the holding structure of SOXX is slightly different as compared to SMH. This can prove to be a good alternative to investors if they want to be able to access the vital sector but through a different mode.
The major holdings of SOXX are Broadcom, Qualcomm, and Texas Instruments, which are some of the biggest companies in semiconductor manufacturing.
SOXX is priced at US$233.39, and its 52-week range is from US$213.89 to US$237.93. The fund has generated high returns due to increasing demand for semiconductor products.
The expense ratio of SOXX is 0.43%. These expense ratios are meager compared to the returns offered by the fund, as they are giving focused exposure to the semiconductor industry.
The Fidelity MSCI Information Technology Index ETF offers good broad-based exposure to the US technology sector. The tracking is similar to the MSCI Information Technology ETF.
FTEC's portfolio incorporates tech titans like Apple, Microsoft, and NVIDIA meaning one stands to gain from the growth of the most impactful tech powers in the world.
FTEC holds at US$172.53, which is under one year high/low set at US$154.33 to US$172.53. In addition, this fund trading performance mimics the US tech market; therefore FTEC is a recommendation for long-term investors.
FTEC attracts fee-conscious investors due to its relatively low expense ratio of 0.08% compared to the tech ETF universe.
The iShares Expanded Tech-Software Sector ETF (IGV) is one of the technology ETFs with an investment in the software sector, which it defines to include those companies that are engaged in software development and related services. This is one of the more innovative areas within the tech sector.
Top holders in IGV are Microsoft, Adobe, and Salesforce.com, meaning it will be tilted towards those larger software companies.
IGV is trading at US$86.37, the midpoint of its 52-week range of US$82.53 to US$86.37. This fund's upside is, as is often the case with software funds, fully dependent on the growth of the software industry, which has long been one of the primary areas of innovation within the broader technology universe.
IGV has an expense ratio of 0.43%, making this a cost-effective, targeted way of playing growth in the software space.
The First Trust NASDAQ Cybersecurity ETF is constructed to follow the cybersecurity sector, the relevance of which has skyrocketed in this digital age. With cyber threats slated to grow and, for that matter, the demand for cybersecurity solutions, it will be equally fascinating.
The fund's portfolio includes firms such as CrowdStrike, Palo Alto Networks, and Fortinet, all leading firms in the cybersecurity space.
CIBR's price today is US$59.22, which falls within the 52-week range of US$54.72 and US$59.22. This shows the growing significance of cyber security for protecting digital assets.
With an expense ratio of 0.60%, CIBR is decidedly more expensive than some competing tech ETFs discussed earlier, which again is because it's a specialty within a fast-rising space of cybersecurity.
The iShares Global Tech ETF provides a way for investors to gain global exposure to the technology sector, including both US and international companies. If you want to spread your technology investment across different regions, this is the ETF that will provide that kind of exposure.
The key constituents of IXN are global tech giants like Apple, Microsoft, and Samsung, thus providing both US and international exposure to its constituents.
IXN trades for US$82.65 at the time of writing within its 52-week range of US$73.90 and US$82.65. Having enjoyed the spread of the world tech sector, it easily presents a beautiful opportunity to the eye of the investor who is keen on foreign markets.
The expense ratio stands at 0.43%, giving diversification of the global technology sector at the right price.
Direxion Daily Technology Bull 3X Shares (TECL) is last but not least among the top technology ETFs. It is a leveraged ETF that offers three times the daily performance of the Technology Select Sector Index. It is meant for aggressive investors who want to maximize their returns from the technology sector.
It has leveraged positions in companies such as Apple, Microsoft, and NVIDIA, so it is significantly responsive to these tech giants.
TECL is $87.84; it changes between US$76.77 and US$90.20 over 52 weeks. While it may bring extraordinary profits, it is riskier than regular funds because of the leverage.
One of the priciest, compared with traditional ETFs, this 0.95 percent expense ratio ETF spells out the additional costs involved with its leveraged strategy.
In all, technology ETFs offer both diversification and efficiency in investment across the fast-changing technology sector. Each one of these ETFs has its special benefits, be it broad sector exposure, or they offer targeted industry focus or leveraged returns. Be it any investment, you must know your risk tolerance, investment goals, and characteristics of every ETF before making your decisions. So, in 2024, anything that interests a long-term investor surely can be found in a technology ETF.
