Best Information Technology ETFs Right Now

Information technology has become a force in just about every market. You may know you want to invest in information technology but don't really want to rely on picking individual stocks. Consider investing in information technology ETFs instead. You can buy and sell a basket of assets — the perks of an ETF! — without having to worry about individual stock picking. Plus, you'll be automatically diversified.

Quick Look at the Best Information Technology ETFs:

• Technology Select Sector SPDR Fund
• Vanguard Information Tech ETF
• iShares U.S. Technology ETF

Information Technology ETFs Biggest Gainers and Losers

Our biggest gainers and losers lists can give you an idea of how these information technology ETFs match up against each other. For example, last year the top tech ETF gainers were Fidelity MSCI Information Technology Index, Vanguard Information Technology and Invesco Dynamic Semiconductors.

Companies that came up short last year: VanEck Vectors India Small-Cap Index, Invesco S&P SmallCap Energy and Velocity Share Long.

So far this year, the list is completely different. Only Vanguard Information Tech made the top 5. 

Premarket Information Technology ETFs

The premarket can satisfy your urgent need to enter or vacate an investment position, protect your holdings and react to off-hours news and events. Here's recent activity for information technology ETFs.

Aftermarket Information Technology ETFs

You can monitor trades in after hours sessions to gauge investor sentiment toward an ETF you are holding and react immediately to breaking news. Here's after-hours activity for information technology ETFs.

Why Invest in Information Technology ETFs?

There are dozens of reasons to invest in information technology ETFs, but here are the three top reasons to dip into this market:

• Instant diversification: Investing in information technology ETFs means reducing investment in one single asset, which in turn reduces risk. This is also a great approach if you're investing for the long term.
• Cheaper than other funds: ETFs are diversified like mutual funds — just at a cheaper price. They don't have the overhead costs that actively-managed mutual funds incur.
• Easy to trade: You don't have to wait until the end of the day to trade information technology ETFs — you can trade them at any time during the day.  

3 Information Technology ETFs by AUM

Companies in the information technology ETF sector concentrate on the research, creation, development and marketing of a wide variety of hardware and software to individuals and organizations. 

Before you invest, you'll want to thoroughly research each ETF you're considering in the tech sector. Evaluate holdings, fees, assets under management (AUM) and more before you jump in. Here's our list of the best information technology ETFs to invest in now. 

1. Technology Select Sector SPDR Fund (XLK)

XLK offers you the ability to gain exposure to many firms in the tech hierarchy. The fund’s high-profile holdings include Microsoft Corp, Apple Inc, Intel Corp and Mastercard. To qualify, companies must operate in many sectors under the technology umbrella. This includes semiconductors, wireless telecommunications services and IT services.

This information technology ETF has $23 billion AUM with and ER of 0.13%. It invests a bulk of its assets in big-name U.S. companies like Cisco Systems and Oracle Corp. Although its focus is on large-cap companies, XLK increases its diversification by investing in several technology sectors. So far, the fund’s approach has worked very well — its 10-year annual recurring revenue (ARR) is 16.97%. 

2. Vanguard Information Tech ETF (VGT)

VGT offers you wide, middle-of-the-road exposure to U.S. technology at an affordable cost. This fund tracks the performance of the MSCI US IMI Info Technology 25/50 Index. It has a diverse representation of the tech sector. Compared to most tech ETFs, VGT holds a lot of small- and mid-cap stocks. Of its 330 holdings, it has about 20 elite tech companies; 10 of those companies make up 54% of the fund’s asset allocation. This curbs the fund’s volatility. 

A broad, diverse strategy has benefited VGT in the technology sector. It has an AUM of $22.1 billion with an expense ratio of 0.10%. Even more impressive, it has a 10-year ARR of 17.45%.

3. IShares U.S. Technology ETF (IYW)

IYW tracks the outcomes of the market-cap weighted index of U.S. technology companies. Through this fund, you can get exposure to the U.S. tech sector with a sector-specific focus. The approach may be too granular for long-term investors. However, the fund is very stable because Apple, Microsoft and IBM dominate the top of the holdings list. 

IYW has a decent AUM of $4 billion — and the ER is a bit high, at 0.42%. The fund’s annual rate of return is 11.51%. Also, it has enough liquidity to trade shares approximately 200,000 times per day.

Best Online Brokers for These ETFs

New online brokers enter the market on a regular basis. Successfully trading information technology ETFs requires up-to-date information, accurate tracking tools, excellent customer service and an abundance of research material. The following companies are the best online brokers for information technology ETFs.

Best For

• Chase Customers

get startedsecurely through Self Direct Investment by JP Morgan's website

1. You Invest by J.P. Morgan

If you’re already a customer with Chase Bank, Chase You Invest by J.P. Morgan is a no-brainer. You can easily research, trade and manage your investments from your mobile device. You Invest provides online tools to search for investments, track companies and rollover your assets.

It takes just 1 day to open and you’re able to apply fully online. Equipped with portfolio reports and pie charts, the mobile app is simple and user-friendly. The app is available for both iOS and Android devices.

With Chase You Invest, you’ll have access to roughly 5,000 stock exchanges. There are plenty of research and educational tools provided on the app. It’s easy to open and fund an account. It’s also reliable thanks to its strong parent company, J.P. Morgan. 

Best For

• Futures Trading

get startedsecurely through TradeStation's website

2. TradeStation

It’s hard to beat TradeStation in trading technology. It has one of the most interactive desktop platforms in the industry. The web-based, desktop and mobile platform variations give you the versatility to trade from anywhere. 

The combination of a top-notch trading environment and $0 ETF trades gives you an opportunity to easily and efficiently trade information technology ETFs. 

TradeStation’s desktop platform includes a radar screen with 329 customizable columns, a scanner with a custom screen, a Walk-Forward optimizer and a matrix for ladder trading. TradeStation also offers extended trading sessions.

Best For

• Mobile Investing

Open an account securely through Firstrade's website

3. Firstrade

Based on the analysis of 57 online brokers, BrokerChooser.com named Firstrade the best broker for funds for 2020. It offers free ETF stock trades, extended hours trading and free onboarding. If you’re a novice, this broker provides a wealth of educational material including instructional videos and webinars. 

The research tools provide interactive charts, preset peer group comparisons and data on asset fundamentals — its charting tools have 50 technical indicators. Also, Benzinga provides streaming news feeds concerning current market developments. 

Best For

• Forex and investing app

get startedsecurely through TD Ameritrade's website

4. TD Ameritrade

Most online broker reviewers agree that TD Ameritrade rates No. 1 or near the top in every online trading category. It offers free ETF trades, $0 minimum deposit and extended-hours trading. Plus, it has 300 no-fee ETFs. 

Barron's voted TD Ameritrade’s thinkorswim the No. 1 trading platform. Also, the mobile app is compatible with tablets, phones or Apple Watch. The web trading platform is user friendly and provides easy viewing charts. 

Also, this brokerage offers peerless research tools. The ETF Market Center enables you to research and monitor ETFs with predefined screens. You can focus on a particular sector, match a style of investing or do side-by-side fund comparisons. 

How Does the Information Technology ETF Market Apply to You?

Technology companies have solidly supplanted industrial, blue-chip businesses as the dominant force in today’s marketplace. The safest and most rewarding way for you to participate in this thriving sector is through these ETFs.

Frequently Asked Questions