Investors seeking targeted exposure to the technology space have a number of broad sector plays at their disposal. For starters, the Technology Select Sector SPDR (NYSEArca: XLK) has been a popular option to target technology names in the S&P 500. Alternatively, the Vanguard Information Technology ETF (NYSEArca: VGT) is a cost-efficient avenue for investors looking for technology exposure as well. Large institutional traders may enjoy the robust liquidity found in XLK, but long-term investors who are less concerned about day-to-date, bid-ask spreads may like the cheaper 0.10% expense ratio found in VGT, compared to XLK’s 0.14% expense ratio.
Both XLK and VGT track market capitalization-weighted indices, so the top components include prominent names like Apple (NasdaqGS: AAPL), Microsoft (NasdaqGS: MSFT) and Facebook (NasdaqGS: FB).
Among the best performing tech-related ETFs so far this year, the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) increased 27.2% and Global X Social Media Index ETF (NasdaqGM: SOCL) advanced 25.2%.
SMH targets the semiconductor sub-sector, with large positions in well-known names like Intel (NasdaqGS: INTC) 13.4%, Taiwan Semiconductor Manufacturing (NYSE: TSM) 12.7% and Qualcomm (NasdaqgS: QCOM) 7.7%. The ETF also includes some overseas holdings, including 12.7% Taiwan, 8.5% Netherlands, 6.0% Japan and 5.1% Singapore, along with 66.5% U.S.
SOCL targets companies involved in the social media game. While the social media ETF includes some known social media names like Facebook (NasdaqGS: FB) 9.6% and Twitter (NasdaqGS: TWTR) 8.9%, SOCL also includes internet and media names that investors may not think of, such as Tencent 10.1%, Alphabet (NasdaqGS: GOOG) 4.6% and Yahoo (NasdaqGS: YHOO) 4.8%. The fund also includes a significant international exposure, including 23.5% China, 9.8% Japan, 7.6% Russia, 4.2% Germany and 1.0% Taiwan, along with 53.8% U.S.
Full disclosure: Tom Lydon’s clients own shares of SPY.