12 Best Tech ETFs for 2024

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Technology stocks have been on a tear. The Nasdaq-100 index, which includes the top 100 stocks on the tech-heavy Nasdaq exchange, is up 55.13% in the past year. The tech sector is up 45.7% in the past year. Chipmaker Nvidia gained 230% in just the past 12 months. Despite these amazing results, picking tech stock remains a risky endeavor. While Apple, Amazon, Alphabet and others continue to rise over time, tech investors in search of the next big thing can still face losses.

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Enter the tech ETF. Exchange-traded funds act like mutual funds since they contain a basket of securities, but they trade like stocks on an exchange with prices adjusted throughout the day. And most ETFs are passively managed and mirror an index to provide returns approximately equal to that index. Tech ETFs can be a good way to invest in tech and take some of the risk off the table.

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12 Best Tech ETFs

Here are some tech ETFs to look at in 2024:

• Invesco QQQ Trust (QQQ)
• VanEck Semiconductor ETF (SMH)
• SPDR NYSE Technology ETF (XNTK)
• iShares U.S. Technology ETF (IYW)
• First Trust Nasdaq-100-Technology Sector Index Fund (QTEC)
• iShares Semiconductor ETF (SOXX)
• Invesco PHLX Semiconductor ETF (SOXQ)
• Technology Select Sector SPDR Fund (XLK)
• First Trust Dow Jones Internet Index Fund (FDN)
• Invesco S&P 500 Equal Weight Technology ETF (RSPT)
• Vanguard Information Technology ETF (VGT)
• SPDR S&P Software & Services ETF (XSW)

1. Invesco QQQ Trust (QQQ)

The Invesco QQQ Trust is one of the original tech ETFs, established in 1999. It’s been a solid performer all along, but it really took off around 2022. QQQ is up 65.22% in the last 12 months, and it closed at $434.51 on Feb. 15, very close to its 52-week high of $439.14. This fund aligns with the Nasdaq-100 index.

Top holdings include Microsoft Corp., Apple Inc., Amazon.com Inc., Nvidia Corp. and Broadcom Inc.

2. VanEck Semiconductor ETF (SMH)

This semiconductor ETF has gained 60.17% in the past year. VanEck Semiconductor ETF has a significant position in Nvidia (22.91%), but it also holds Taiwan Semiconductor Manufacturing Co. Ltd. ADR (9.36%), Advanced Micro Devices Inc. (6.12%) and ASML Holding NV ADR (5.21%).

3. SPDR NYSE Technology ETF (XNTK)

The SPDR NYSE Technology ETF invests in the companies that comprise 35 leading technology companies listed on the New York Stock Exchange. Top holdings include Advanced Micro Devices Inc., Nvidia Corp., Broadcom Inc., ASML Holding NV ADR, Netflix Inc., and Lam Research Corp.

In the past 12 months, the SPDR NYSE Technology ETF is up 51.97%.

4. iShares US Technology ETF (IYW)

The iShares U.S. Technology ETF invests at least 80% of its assets in the components of, and in investments that have substantially identical economic characteristics of, the technology sector. Its top holdings include Microsoft Corp., Apple Inc., Nvidia Corp., Alphabet Inc. Class A, Alphabet Inc. Class C and Meta Platforms Inc. Class A. The iShares US Technology ETF has gained 51.25% in the past 12 months.

5. First Trust Nasdaq-100-Technology Sector Index Fund (QTEC)

The First Trust Nasdaq-100-Technology Sector Index Fund invests in the securities that comprise the technology stocks in the Nasdaq-100 index in a weight equal to the index. No single stock makes up more than 3% of the fund, and top holdings include Nvidia Corp. (2.97%), Advanced Micro Devices Inc. (2.84%), Meta Platforms Class A (2.75%), ASML Holding NV ADR (2.73%) and Marvell Technology Inc. (2.68%).

The Nasdaq as a whole has performed very well over the past year, with tech stocks leading the way. This best-of-the-best ETF has returned 48.18% over the last 12 months.

6. iShares Semiconductor ETF (SOXX)

Focused specifically on the semiconductor sector, which has been on fire lately, the iShares Semiconductor ETF has gained 45.74% in the past year. Its top holdings include Advanced Micro Devices Inc., Nvidia Corp., Broadcom Inc., Qualcomm Inc. and Intel Corp.

7. Invesco PHLX Semiconductor ETF (SOXQ)

The Invesco PHLX Semiconductor ETF invests in securities that comprise a modified market-capitalization weighted index of the 30 largest U.S. semiconductor companies. Its largest positions include Advanced Micro Devices Inc. (9.65%), Nvidia Corp. (9.18%) and Broadcom Inc. (8.91%).

In the past 12 months, SOXQ is up 45.57%.

8. Technology Select Sector SPDR Fund (XLK)

The Technology Select Sector SPDR Fund invests in the stocks that make up the technology sector, in roughly the same proportion as the sector itself. Top holdings include Microsoft Corp. (22.97%), Apple Inc. (20.37%), Nvidia Corp. (5.48%), Broadcom Inc. (5.29%) and Adobe Inc. (2.97%).

The Technology Select Sector SPDR Fund is up 42.55% in the past year.

9. First Trust Dow Jones Internet Index Fund (FDN)

The First Trust Dow Jones Internet Index Fund invests in the largest and most actively traded companies in the internet industry. These are the tech names everyone knows, like Amazon.com Inc., Meta Platforms Inc., Netflix Inc., Salesforce Inc., Alphabet Inc. Class A and Class C, Cisco Systems Inc. and so on.

Some of these internet stocks are fairly mature, so this ETF has had slightly more moderate 12-month growth of 37.55%.

10. Invesco S&P 500 Equal Weight Technology ETF (RSPT)

The Invesco S&P 500 Equal Weight Technology ETF invests at least 90% of its assets in securities that comprise the S&P 500 Information Technology Index. Its top holdings include Advanced Micro Devices Inc., Nvidia Corp., Juniper Networks Inc., Broadcom Inc., Fortinet Inc. and Western Digital Corp.

The performance of the Invesco S&P 500 Equal Weight Technology ETF over the past 12 months has been up 23.46%.

11. Vanguard Information Technology ETF (VGT)

The Vanguard Information Technology ETF tracks the performance of the MSCI US IMI Information Technology 25/50 Index, which includes companies of all sizes in the information technology sector. It’s up 21.83% in the past year.

Top holdings include Microsoft Corp. and Apple Inc., each of which represents over 20% of the fund’s investments. Other top holdings include Nvidia Corp., Adobe Inc. and Salesforce Inc.

12. SPDR S&P Software & Services ETF (XSW)

The SPDR S&P Software & Services ETF tracks the S&P Software & Services Select Industry Index, which is the software and services segment of the S&P Total Market Index. This fund invests less than 1% of its holdings in any single company at the moment. Top positions include Atlassian Corp. Class A, Fortinet Inc., Adeia Inc., Zeta Global Holdings Corp. Class A and DocuSign Inc.

In the past 12 months, the SPDR S&P Software & Services ETF is up 21.29%.

How To Add Tech ETFs to Your Portfolio

ETFs are purchased and sold just like stocks. They are priced continuously during the trading day, unlike mutual funds, which are priced at the end of the day.

Most ETFs, including those listed above, are passively managed, which means they track indices — in this case, a broad technology index or a more specific index like semiconductors or internet companies. Because of this, they will perform pretty much the same way the index does — you won’t beat the index, but you won’t suffer considerably more losses than the index, either.

Most mutual funds, by comparison, are actively managed, and this increases their costs. They may also require a minimum purchase.

You can add ETFs to your portfolio the same way you would add any stock. You can purchase most ETFs in any brokerage account — after you’ve done your research, of course. You can place a market order to purchase the ETF right away at the current trading price, or a limit order, where you name the highest price you will pay and the order is only executed when the ETF reaches that price or a lower one.

ETFs are a good way to invest in a specific sector without having to choose which stocks in that particular sector are poised to make big gains. This is particularly true for a sector like tech, which can be volatile, but where the winners can really win big.

FAQ

• What is the best tech ETF?
  • Tech ETFs have performed very well lately, and it’s hard to say if this will continue. In the past year, some of the best performers include Invesco QQQ Trust (QQQ), VanEck Semiconductor ETF (SMH) and SPDR NYSE Technology ETF (XNTK).
• What are the top three ETFs?
  • In terms of assets under management, the SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO) top the list.
• Is QQQ a good tech ETF to invest in?
  • The Invesco QQQ ETF is one of the best long-term performing ETFs in the tech sector and also has one of the longest track records. There’s no guarantee it will continue to perform at the same pace, but QQQ and other ETFs that track the Nasdaq-100 have done very well over time.

Data is accurate as of Feb. 16, 2024, and is subject to change.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

This article originally appeared on GOBankingRates.com: 12 Best Tech ETFs for 2024