Investors looking for exposure to the technology sector have dozens of exchange traded funds from which to choose, but one of the least expensive funds is the also one of the largest: the Vanguard Information Technology ETF (NYSEArca: VGT).
As a cap-weighted fund, VGT sports large weights to the likes of Apple Inc. (NASDAQ: AAPL), Facebook Inc. (NASDAQ: FB) and Google parent Alphabet Inc. (NASDAQ: GOOG), among other tech titans. 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.
VGT follows “the MSCI U.S. Investable Market Information Technology 25/50 Index. This index includes tech stocks in three primary areas: software and services, hardware and equipment, and semiconductors. The ETF seeks to own substantially all of the component stocks in the index, although it also has the right to use sampling techniques in order to comply with regulatory requirements or overcome other impediments to full ownership of all the stocks in the index,” according to the Motley Fool.
As is the case with many of Vanguard’s sector ETFs, VGT has a large roster, 365 stocks to be precise. That makes it one of the largest technology ETFs in terms of number of holdings. Still, the ETF is heavily allocated to its top 10 holdings. That group combines for 56.6% of the ETF’s weight. Alone, Apple accounts for 14.3% of VGT’s lineup.