Vanguard Information Technology Index Fund ETF Shares (VGT)
Image of hand touching globe with a city in the background, implyingconnectivitySource: Shutterstock52-week range: $179.45 – $382.73 1-year price change: Up about 64% Dividend yield:0.82% Expense ratio: 0.1%Our final discussion centers around another tech ETF. The Vanguard InformationTechnology ETF gives access to diversified tech businesses. The fund startedtrading in January 2004, and net assets stand close to $47 billion.VGT, which tracks the returns of the MSCI US IMI Info Technology 25/50 index,holds 345 companies. Over 57% of the assets are in the top 10 names. Thus,substantial price moves in these names affect the value of the fund. In termsof sectors, technology hardware, storage and peripheral leads with 23.2%. Nextin line are systems software (20.1%), semiconductors (15.9%), and applicationsoftware (13.3%).Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Visa(NYSE:V), Mastercard (NYSE:MA), and PayPal (NASDAQ:PYPL) are among top thenames in the roster. In recent years, these firms have been tech darlings andgrowth leaders.Given the recent up in the share price of many of these companies, there couldsoon be profit-taking in the fund. However, the new decade is likely to beshaped by technological innovations. Therefore, the fund deserves to be onyour radar.On the date of publication, Tezcan Gecgil is long T stock.Tezcan Gecgil has worked in investment management for over two decades in theU.S. and U.K. In addition to formal higher education in the field, she hasalso completed all 3 levels of the Chartered Market Technician (CMT)examination. Her passion is for options trading based on technical analysis offundamentally strong companies. She especially enjoys setting up weeklycovered calls for income generation.
In a hurry? Here’s the list:
1. VGT – Vanguard Information Technology ETF 2. XLK – Technology Select Sector SPDR Fund 3. QQQ – Invesco QQQ Trust 4. FDN – First Trust Dow Jones Internet Index Fund 5. ARKK – ARK Innovation ETF
XLK – Technology Select Sector SPDR Fund
The Technology Select Sector SPDR Fund (XLK) is another popular broad techETF. The fund was established in 1998 and seeks to track the Technology SelectSector Index. This ETF has 72 holdings. Whereas VGT above provides about 10%mid-cap growth exposure, XLK is exclusively large-caps. XLK has an expenseratio of 0.13%.
Tech ETFs to Buy: Vanguard Information Technology ETF (VGT)
Source: ShutterstockVanguard’s Information Technology ETF, which has $36.9 billion in assets undermanagement, provides a way to get a broad exposure to the technology universein the U.S. market. The ETF is based on the MSCI US Investable Market IndexInformation Technology 25/50 index, which has over 330 stocks. The holdingsspan from small to large operators in key areas like software, communicationsequipment, cellular phones, peripherals and semiconductors.However, the index still skews toward large capitalization stocks, with theaverage of $201.8 billion. Some of the top holdings include Apple(NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Visa (NYSE:V), and Mastercard(NYSE:MA).Moreover, a key advantage of this tech ETF is the low-cost structure. Considerthat the expense ratio is only 0.10% for VGT, and also a decent dividend yieldof 1.09%.
Invesco S&P Small-Cap Information Technology ETF (PSCT)
Source: ShutterstockIf you want to get exposure to smaller tech company opportunities, there isthe Invesco S&P SmallCap Information Technology ETF. Yes, the fund is based onthe S&P SmallCap 600 Capped Information Technology Index. And at any giventime, the PSCT fund will invest at least 90% of its assets in this index.Overall, though, it can certainly be volatile. For the year so far, PSCT stockis down 10.4%. However, when it comes to small company tech ETFs, the focusshould be on the long term. For example, the PSCT fund has logged an averageannual return of 14.85% for the past decade.Additionally, the portfolio has an average market cap of about $1.8 billion,and some of the top holdings include AlarmCom (NASDAQ:ALRM), Itron(NASDAQ:ITRI) and LivePerson (NASDAQ:LPSN). In all, the number of positions is75, and none of them represent more than 4.01% of the value of the portfolio.
Tech ETFs to Buy: First Trust Cloud Computing ETF (SKYY)
Source: ShutterstockCloud computing has been around and growing for more than 20 years now. Thecategory was pioneered by Salesforce (NYSE:CRM), which has become one of theworld’s largest software company with a market capitalization of $180.5billion.Nonetheless, the industry is still in the growth phase. In fact, acording toGartner, the spending on cloud computing technologies is forecasted to go from$266.4 billion in 2020 to $354.6 by 2022.That said, though, CRM stock shares are above $200 right now. Therefore, acheaper way to play this megatrend is the First Trust Cloud Computing ETF,which has $4.53 billion in assets under management. This tech ETF uses the ISECTA Cloud Computing Index, and includes a variety of cloud categories likeSaaS (Software-as-a-Service), PaaS (Platform-as-a-Service) and IaaS(Infrastructure-as-a-Service). Some of the top holdings include Microsoft,Amazon (NASDAQ:AMZN), Alibaba (NYSE:BABA) and Oracle (NYSE:ORCL).Moreover, the SKYY fund also has an expense ratio of 0.60% and the dividendyield is right around 0.2%. So, overall, SKYY could be worth a look as one ofthe top tech ETFs to buy.
Tech startup venture capital funds
The biggest downside to investing in a private company is the lack ofliquidity. Unlike public shares on the stock market, equity in a privatecompany is not something that can traded or easily sold.Another route into the tech startup market identified by the Wall StreetJournal is “invest(ing) in later-stage, but still young, companies throughpublicly traded funds that hold stakes in companies already backed by venturecapitalists.” These venture capital funds allow investors to gain exposure toprivate companies that are not publicly listed. Here are a few: * SuRo Capital (NASDAQ:SSSS), formerly GSV Capital, held Spotify (NYSE:SPOT), Dropbox (NASDAQ:DBX), Lyft (NASDAQ:LYFT) and Snap in its portfolio prior to their respective IPOs. * Founded in 1972, Sequoia Capital (NASDAQ:SEQUX) partners with companies in early and late-growth stages with a focus on the internet, mobile, healthcare, financial and energy sectors. Some of the fund’s most profitable exits include NVIDIA (NASDAQ:NVDA) and Instagram. * Firsthand Technology Value Fund (NASDAQ:SVVC) partners with technology and cleantech companies in various stages of maturity through to IPO or acquisition. In recent years, two of its current portfolio holdings listed on the ASX: Pivotal Systems (ASX:PVS) and Revasum (ASX:RVS).Private venture capital funds also offer investors a way into tech startupspre-IPO, including: * Established in 1965, Greylock Partners focuses on early stage companies in the consumer and enterprise software sector, and was an early investor in Airbnb and Facebook. * Lightspeed Venture Partners supports early and growth-stage startups in the consumer, enterprise, technology and cleantech sectors. The firm was the first outside investor in Snap. * Accel Partners invests in early and growth-stage companies in the consumer software, mobile technology, enterprise software and internet segments. Accel was an early investor in Facebook, CrowdStrike Holdings (NASDAQ:CRWD) and Animoca Brands. * Intel Capital, a corporate venture capital arm of Intel (NASDAQ:INTC), primarily focuses on tech firms in the AI, 5G and communications, software security, IoT and robotics arenas.
Tech startup exchange-traded funds
Exchange-traded funds (ETFs) offer a low-cost and lower-risk route toinvesting in tech startups. There are several tech ETF options for everyinvesting style.For investors interested in small-cap tech companies, there is the Invesco S&PSmallCap Information Technology ETF (NASDAQ:PSCT). PSCT tracks a broad indexof small-cap growth companies in the information technology sector, with afocus on the software, internet, electronics, semiconductor, communication andhardware segments.While PCST’s top holdings include more established tech companies, theRenaissance IPO ETF (ARCA:IPO) solely focuses on newly listed companies, asits name suggests. IPO’s top five holdings are Uber Technologies (NYSE:UBER),Zoom Video Communications (NASDAQ:ZM), CrowdStrike Holdings, PelotonInteractive (NASDAQ:PTON) and Pinterest (NYSE:PINS).Another ETF that tracks the performance of recent IPOs is the First Trust USEquity Opportunities ETF (ARCA:FPX). FPX also has a healthy mix of maturecompanies, which helps to diversify its risk profile. Its portfolio includesSnap, Uber, CrowdStrike Holdings, Spotify, Zoom and DocuSign (NASDAQ:DOCU).Don’t forget to follow us @INN_Technology for real-time updates!This is an updated version of an article first published by the Investing NewsNetwork in 2016.Securities Disclosure: I, Melissa Pistilli, hold no direct investment interestin any company mentioned in this article.<< What is Technology Investing?What is an IPO? >>Top 10 Largest Technology ETFs: Riding the Tech WaveWhat are the largest technology ETFs? Technology companies are dominating thestock market, and of course, the world. With the rise of artificialintelligence, machine learning, and other futuristic technologies, techcompanies are expected to play an even bigger role in our lives. If you arebullish on the tech sector, technology ETFs are one of the simplest andeasiest ways to gain exposure to a broad range of tech companies. Here we takea look at the top 10 largest technology ETFs listed in the US.Technology ETFs invest in the stocks of companies providing technologyhardware, software, and services. They include Apple, Amazon, Facebook,Microsoft, Cisco, Nvidia, and more. Some tech ETFs also have medical devicesstocks in their portfolio.Angelo Giampiccolo/Shutterstock.comThere are more than 80 technology ETFs in the US. When investing in ETFs, youshould look at their assets under management (AUM), trading volumes, andexpense ratios besides the index they track. ETFs with lower AUMs and tradingvolumes 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 makessense to invest in one of the largest technology ETFs.An ETF tracks a benchmark index. Instead of outperforming the index, the ETFaims to match its performance. ETFs are listed on a stock exchange and tradelike a regular stock. You can trade shares of an ETF throughout the tradingday. But this ability to buy and sell shares throughout the day could shiftyour 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 ofFebruary 2020. The ranking is based on data from ETFdb.com.
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. Ittracks the performance of the MSCI USA IMI Information Technology index. Itinvests in the US-based information technology companies. Its largest holdingsare Apple (AAPL), Microsoft (MSFT), Visa (V), and Mastercard (MA). FTEC has atotal of 320 stocks in its portfolio, but the top ten stocks have more than58% weighting.
5- iShares U.S. Technology ETF (IYW), $4.8 billion
Launched in 2000, IYW tracks the performance of the Dow Jones U.S. TechnologyCapped 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 areMicrosoft, Apple, Google, Facebook (FB), and Intel (INTC). The ETF hasdelivered an impressive 18.54% annualized return over the last five years.
3- Vanguard Information Technology ETF (VGT), $26.3 billion
Just like most other Vanguard funds, VGT has a pretty low expense ratio ofjust 0.10%. It tracks the performance of the MSCI US IMI InformationTechnology 25/50 Index. It has invested in more than 300 US technology stocks.VGT’s largest holdings are Apple, Microsoft, Visa, Mastercard, and Intel. Thetop 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 theperformance of the Technology Select Sector Index, which represents thetechnology and telecom sectors within the S&P 500 index. The ETF gives youexposure to technology hardware, software, communications, semiconductors, andIT services companies.