The Technology Select Sector SPDR (NYSEArca: XLK), the largest technology exchange traded fund by assets, is up 9.3% year-to-date and some market observers are betting on more upside for the S&P 500’s biggest sector weight.
Rivals to XLK include the Fidelity MSCI Information Technology Index ETF (NYSEArca: FTEC) and the Vanguard Information Technology ETF (NYSEArca: VGT). Apple Inc. (NASDAQ: AAPL) is the largest holding in all three ETFs.
While the various sector-specific ETFs provide broad exposure to their targeted segments, investors should keep in mind that there are differences in the different ETF offerings.
For instance, the Select Sector SPDR line of ETFs have more focused or less diversified exposure since they take holdings from the smaller universe of S&P 500 companies. The Vanguard line may have the most diversity with higher number of components.The Fidelity ETFs, though, are the cheapest of the bunch, which may be more appealing to long-term investors.
“Strength in the tech space has been broadly based across small, large- and mid-cap tech stocks, said Ari Wald, Oppenheimer’s head of technical analysis. More granularly, strength can also be found across the sector’s industry groups — semiconductors, hardware and software names,” reports CNBC.