As we move forward into 2021, the field of Information Technology (IT) continues to expand and evolve, pushing investors to find the best ways to capitalize on this growth. One way to do so is by investing in IT exchange-traded funds (ETFs), which offer a diversified portfolio of technology stocks. In this article, we will take a look at the top 5 Information Technology ETFs to invest in for 2021.
1. Technology Select Sector SPDR Fund (XLK)
The Technology Select Sector SPDR Fund is one of the largest and most popular ETFs for investing in technology stocks. It seeks to track the performance of the Technology Select Sector Index, which includes companies in the technology and telecommunication sectors. XLK offers a low expense ratio and a broad range of well-known tech companies, such as Apple, Microsoft, and Facebook.
2. Fidelity MSCI Information Technology Index ETF (FTEC)
The Fidelity MSCI Information Technology Index ETF seeks to track the performance of the MSCI USA IMI Information Technology Index, which includes companies in the technology sector. FTEC has a lower expense ratio than XLK and offers greater exposure to mid-sized technology companies. Additionally, FTEC has outperformed XLK over the last 5 years.
3. Vanguard Information Technology ETF (VGT)
The Vanguard Information Technology ETF seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index, which includes companies in the technology sector. VGT is a low-cost ETF with a broad range of holdings, including large, mid, and small-cap technology companies. VGT also has outperformed XLK over the last 5 years.
4. iShares Global Tech ETF (IXN)
The iShares Global Tech ETF seeks to track the performance of the S&P Global 1200 Information Technology Sector Index, which includes companies in the technology sector across the world. IXN offers a diversified portfolio of technology companies, including exposure to international markets. This ETF has a higher expense ratio than XLK, VGT, and FTEC, but still has a strong track record of performance.
5. Invesco QQQ Trust (QQQ)
The Invesco QQQ Trust seeks to track the performance of the NASDAQ-100 Index, which includes companies in the technology, healthcare, and consumer sectors. QQQ offers investors exposure to many of the notable technology companies, such as Amazon, Google, and Netflix. Despite its increased exposure to non-tech sectors, over 50% of the holdings within QQQ are in the technology sector.
In conclusion, investing in technology ETFs is a great way to capitalize on the continued growth of the IT industry. Each of the top 5 Information Technology ETFs to invest in for 2021 offers unique benefits, such as diversified exposure to companies of various sizes or exposure to international markets. By picking the right ETFs, investors can gain exposure to the technology sector while spreading out their risk.
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