XLK vs. IYW: Which Tech ETF Is Better for Investors in the Second Half of 2026?
Key Points
State Street Technology Select Sector SPDR ETF offers a significantly lower expense ratio and larger assets under management than iShares U.S. Technology ETF.
iShares U.S. Technology ETF maintains a broader portfolio with 148 holdings compared to the 74 positions in the State Street fund.
State Street Technology Select Sector SPDR ETF has achieved higher total returns and experienced a smaller maximum drawdown over the last five years.
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The technology sector remains a cornerstone of modern portfolios, frequently driven by high-growth semiconductor and software companies. Analyzing State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) alongside iShares U.S. Technology ETF (NYSEMKT:IYW) illustrates how differing indexing strategies may influence cost, concentration, and performance over time for investors seeking tech-heavy growth.
Snapshot (cost & size)
| Metric | IYW | XLK |
|---|---|---|
| Issuer | iShares | SPDR |
| Share price | $252.23 (as of 6/30/2026) | $190.52 (as of 6/30/2026) |
| Expense ratio | 0.38% | 0.08% |
| 1-yr return (as of 6/30/2026)) | 45.8% | 51.3% |
| Dividend yield | 0.1% | 0.4% |
| Beta | 1.43 | 1.42 |
| AUM | $25.2 billion | $120.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Fees represent a significant point of divergence, as the State Street fund is notably more affordable with an expense ratio of 0.08%. This is considerably lower than the 0.38% charged by its iShares peer. Furthermore, the State Street fund offers a higher trailing payout.
Performance & risk comparison
| Metric | IYW | XLK |
|---|---|---|
| Max drawdown (5 yr) | (39.4%) | (33.6%) |
| Growth of $1,000 over 5 years (total return) | $2,577 | $2,679 |
What's inside
State Street Technology Select Sector SPDR ETF maintains a concentrated portfolio of 74 stocks, providing 100% technology exposure. Its largest positions include Nvidia at 12.8%, Apple at 11.6%, and Microsoft at 7.7%. It was launched in 1998. State Street Technology Select Sector SPDR ETF has paid $0.79 per share over the trailing 12 months, which on its recent ~$190.52 share price works out to a 0.4% yield.
The iShares U.S. Technology ETF provides broader coverage by holding 148 stocks, offering more varied exposure than its more concentrated peer. Its top holdings include Nvidia at 12.82%, Apple at 11.60%, and Microsoft at 8.19%. It was launched in 2000. iShares U.S. Technology ETF has paid $0.26 per share over the trailing 12 months, which on its recent ~$252.23 share price works out to a 0.1% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
For investors looking to start or add tech-specific exposure, both XLK and IYW could be solid options as part of a diversified portfolio. They have similar returns over one- and five-year periods, as well as similar maximum drawdowns over the past five years. Which one is better for investors?
XLK offers a significantly lower expense ratio, larger assets under management, and a higher dividend yield compared to IYW, but with only 74 stocks, it also carries more concentration risk. The fund is designed to provide an effective representation of the technology sector of the S&P 500 index, including technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments, and components companies.
IYW tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, which measures the performance of U.S. technology companies within the Russell 1000 and utilizes a modified market-cap weighting.
While the indexes are different, the results are pretty similar, down to their top holdings. For most investors seeking exposure to the tech sector’s growth potential, XLK may be slightly more attractive because of its lower fees and slightly higher dividend yield, which both allow investors to grow a little bit more of their money.
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Sarah Sidlow has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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