Google and Microsoft have long been at each others’ throats in the fight for dominance. As investors look for a way to play the face-off, here’s a reason why exchange traded funds (ETFs) may be the way to go.

Although the official lifting of “beta” off of Google’s (GOOG) Gmail service means nothing to daily Gmail users, it gives the company the chance to get the paid version of Google Apps adopted inside big companies. Miguel Helft for The New York Times reports Google is trying to compete with rival offerings from other companies.

Corporate technology managers tend to shy away from beta products, and Google wants to remove any barriers to adoption that it can.

Meanwhile, Google has plans to tackle its biggest competitor, Microsoft (MSFT), with a system will be designed at first for low-cost laptops called netbooks, and the system will be based on its Chrome Web browser. Brian Womack for Bloomberg reports that this plan will up the competition on business applications such as word processing and spreadsheets. Windows, Microsoft’s flagship product, runs about 90% of the world’s personal computers.

Why are ETFs the way to go for investors who want to play this fight?

  • Can you predict who will emerge victorious? We sure can’t. Holding an ETF with both companies allows you to play both, and several tech ETFs have heavy weightings in both companies.
  • Tech ETFs are diversified enough that you not only get exposure to Google and Microsoft, but you get exposure to a host of other companies, too.
  • Having wide exposure across a sector benefits investors and allows them to capitalize while spreading risk and minimizing volatility.
  • iShares S&P North American Technology (IGM): up 19.9% year-to-date; Microsoft 9.4%; Google 5.8%

  • Technology Select Sector SPDR (XLK): up 13.6% year-to-date; Microsoft 9.3%; Google 5%

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.