As S&P Capital IQ notes, XLK includes telecom stocks, but the rival Vanguard Information Technology ETF (NYSEArca: VGT) does not, offering a purer tech sector experience.
“The $6 billion ETF has no telecom services stocks but does include some mid- and small-caps. The median market capitalization of its holdings was just $1.8 billion, much lower than the $16 billion of XLK, and, not surprisingly, its three-year standard deviation of 13.6 was also higher than XLK’s 11.6. Yet because there is still a lot of overlap in its holdings, VGT’s ranking is also aided by the Fair Value and Credit Ratings of its holdings,” said the research firm.
VGT is two basis points per year cheaper than XLK, but the Vanguard offering has a wider bid/ask spared and has lagged XLK this year, according to S&P Capital IQ.
Apple, Microsoft, IBM, Qualcomm and Cisco combined for almost 34% of VGT’s weight at the end of August, according to Vanguard data.
Technology Select Sector SPDR
Tom Lydon’s clients own shares of Apple.