Growth investors shouldn't leave these three tech ETFs alone.
Investing in the stock market can be difficult. After all, there are tens of thousands of investment options to choose from. So where is the best place to start?
In my opinion, exchange traded funds (ETFs) offer something for everyone. A great place for new investors to start. Savvy investors, on the other hand, can find ETFs that can help enrich their portfolios and boost their returns.
So let's take a look at three technology ETFs that growth-oriented investors may want to consider.
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Technology Select Sector SPDR Fund
First, Technology Select Sector SPDR Fund (XLK 2.79%). This ETF is one of the world's largest tech sector ETFs, with over $65 billion in net assets. Additionally, it is one of the oldest tech ETFs, with a track record dating back to the 1990s.
Top holdings include: microsoft, apple, Nvidia, broadcomand advanced micro device. However, potential investors should be aware of how top-tier these holdings are. Microsoft and Apple alone account for 42% of the fund's total holdings.
| Company Name | symbol | percentage of assets |
|---|---|---|
| microsoft | MSFT | 22.9% |
| apple | AAPL | 19.3% |
| broadcom | AVGO | 4.5% |
| Nvidia | NVDA | 4.5% |
| Advanced Micro Devices | AMD | 3.1% |
| sales force | CRM | 3.1% |
| adobe | adobe | 2.4% |
| Accenture | ACN | 2.3% |
| Cisco Systems | CSCO | 2.1% |
| oracle | ORCL | 2.1% |
Looking at performance, this fund wonderful The compound annual growth rate (CAGR) for the past 10 years was 20.3%; S&P500achieved a CAGR of 12.5% over the same period.
Moreover, the fund's expense ratio is an impressive 0.09%. This is one of the lowest expense ratios for a sector-focused ETF, meaning investors will pay just $9 a year for every $10,000 they invest in the fund.
VanEck Semiconductor ETF
next, VanEck Semiconductor ETF (SMH 2.69%). As the name suggests, this fund focuses on all aspects of the semiconductor sector, including chip designers, manufacturers, and foundries.
With semiconductors appearing in more places than ever before, including smartphones, cars, and perhaps refrigerators, it's a great time to own semiconductor stocks. As a result, the VanEck Semiconductor ETF boasts a staggering CAGR of 27.2% since 2014.
The fund's top holdings include Nvidia, intelBroadcom.
| Company Name | symbol | percentage of assets |
|---|---|---|
| Nvidia | NVDA | 20.6% |
| Taiwan semiconductor manufacturing company | TSM | 11.9% |
| broadcom | AVGO | 7.7% |
| ASML Holding | ASML | 4.9% |
| texas instruments | texas | 4.6% |
| Qualcomm | QCOM | 4.6% |
| intel | INTC | 4.5% |
| ram research | LRCX | 4.5% |
| micron | Mu | 4.4% |
| applied materials | Amat | 4.4% |
Additionally, the rapid growth of artificial intelligence (AI) applications and the underlying need for faster, more powerful semiconductors mean the future is bright for chipmakers.
Turning to costs, investors in the fund are charged an expense ratio of 0.35%. This isn't terrible, but it also doesn't have the lowest fees for a tech sector ETF. In other words, you're paying for quality when it comes to this ETF.
Invesco QQQ Trust
At the end Invesco QQQ Trust (QQQ 2.01%). Now, strictly speaking, this fund is not a pure tech ETF. Its holdings include the following stocks: costco, pepsicoand marriott International.
But more than 50% of its holdings are in tech companies, which means it qualifies as a tech sector ETF in my book. Additionally, this fund, also known as “QQQ”, is one of my favorite ETFs. Here's why:
The reason why the fund is not overly diversified is that Nasdaq 100 index. The index is comprised of non-financial stocks listed on the Nasdaq Exchange, weighted by market capitalization, with some modifications. In other words, it's similar to the S&P 500 index, but it's a little smaller and has a higher concentration of tech stocks and no financial stocks.
Top holdings include many of the Magnificent Seven, among others.
| Company Name | symbol | percentage of assets |
|---|---|---|
| microsoft | MSFT | 8.8% |
| apple | AAPL | 7.6% |
| Nvidia | NVDA | 5.8% |
| alphabet | google/google | 5.4% |
| Amazon | AMZN | 5.3% |
| meta platform | Meta | Five% |
| broadcom | AVGO | 4.4% |
| tesla | TSLA | 2.4% |
| costco | Fee | 2.3% |
| Advanced Micro Devices | AMD | 1.8% |
In terms of performance, the fund has delivered a CAGR of 18.4% over the past 10 years, which far outpaces the returns of the S&P 500, Dow Jones Industrial Average, and Russell 2000.
QQQ Total Return Level Data by YCharts.
Finally, the expense ratio is a reasonable 0.20%. That is, the investor pays $20 per year for every $10,000 he invests.
In summary, each of these technology-oriented ETFs offers something unique, but all are worth considering for investors looking for growth.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Jake Lerch has held positions at Adobe, Alphabet, Amazon, Invesco QQQ Trust, Nvidia, and Tesla. The Motley Fool has positions with ASML, Accenture Plc, Adobe, Advanced Micro Devices, Alphabet, Amazon, Apple, Applied Materials, Cisco Systems, Costco Wholesale, Lam Research, Meta Platforms, Microsoft, Nvidia, Oracle, Qualcomm, and Salesforce. and recommend these. Taiwan Semiconductor Manufacturing, Tesla, and Texas Instruments. The Motley Fool recommends Broadcom, Intel, and Marriott International and recommends the following options: long January 2025 $290 calls on Accenture, $45 January 2025 calls on Intel. Long calls, January 2026 $395 long call on Microsoft, January 2025 $310 short call on Accenture, January 2026 $405 short call on Microsoft, and May 2024 $47 call on Intel. dollar short call. The Motley Fool has a disclosure policy.
