The technology ETF sector includes companies focused on the research, development, and sale of a broad range of hardware and software used by consumers and businesses. It includes giants such as Apple, Inc. (AAPL) and Microsoft Corp. (MSFT), as well as fast-growing young companies at the leading technological edge of the industry. The sector has, in recent years, often been a major driver of overall gains to the stock market. Perhaps it's no surprise that there are 69 technology exchange-traded funds (ETFs). Despite the success of many mega tech companies, less well-known enterprises in particular carry more investment risk. ETFs can be a useful way to manage this risk.
As of February 11, 2020, the best technology sector ETF for Q1 2020 is the Technology Select Sector SPDR Fund (XLK). Below, we'll look at the top 3 technology ETFs.
- Performance over 1 year: 50.6%
- Expense Ratio: 0.13%
- Annual Dividend Yield: 1.06%
- 3-Month Average Daily Volume: 8,856,630
- Assets Under Management: $28.6 billion
- Inception Date: December 16, 1998
- Issuing Company: State Street SPDR
The Technology Select Sector SPDR Fund utilizes the Technology Select Sector Index as a benchmark. This index is comprised of companies involved in computers, software, communications, semiconductors, and more. XLK focuses on large cap companies. Its largest holdings are Microsoft Corp., the software and cloud computing company; Apple, Inc., the consumer electronics, software and services firm; and Visa, Inc. (V), the financial services company.
- Performance over 1 year: 49.7%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 1.48%
- 3-Month Average Daily Volume: 3,505,371
- Assets Under Management: $1.8 billion
- Inception Date: December 20, 2011
- Issuing Company: VanEck
Following the MVIS US Listed Semiconductor 25 Index, SMH focuses on large-cap, primarily U.S.-based semiconductor companies representing some of the most prominent names in the industry. The fund's largest holdings are Taiwan Semiconductor Manufacturing Co., Ltd. (TSM), the world's largest semiconductor maker; Intel Corp. (INTC), a semiconductor, cloud computing and personal computer manufacturer; and NVIDIA Corp. (NVDA), a graphics processing unit and chip maker.
- Performance over 1 year: 47.3%
- Expense Ratio: 0.46%
- Annual Dividend Yield: 1.22%
- 3-Month Average Daily Volume: 443,970
- Assets Under Management: $2.6 billion
- Inception Date: July 10, 2001
- Issuing Company: iShares
SOXX tracks the PHLX Semiconductor Sector Index. Like SMH above, this fund focuses on large-cap stocks and companies working to develop and manufacture semiconductors. SOXX weights its holdings relatively equally, with no single company earning more than about 8% of total investment. The top holdings for SOXX are currently NVIDIA Corp.; Intel Corp.; and Texas Instruments, Inc. (TXN), a maker of integrated circuits and semiconductors.