Top Tech ETFs for 2026: Can FTEC's Lower Costs Outperform IYW's Concentration?

The Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) offers lower costs, while the iShares U.S. Technology ETF (NYSEMKT:IYW) provides higher recent returns with a more concentrated technology portfolio.

Investors seeking broad exposure to the domestic technology sector often weigh these two heavyweights. While both funds target the same corner of the market, they follow different underlying indexes, resulting in variations in cost, stock count, and recent performance. This analysis compares their portfolios to help clarify which may better suit a long-term growth strategy.

Snapshot (cost & size)

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.

The Fidelity fund is significantly more affordable, charging just 0.08% annually compared to the 0.38% fee for the iShares fund. This cost gap can impact long-term compounding. Additionally, income-oriented investors may note the Fidelity fund offers a slightly higher distribution yield of 0.40%.

Performance & risk comparison

What's inside

Fidelity MSCI Information Technology Index ETF tracks the investment returns of the MSCI USA IMI Information Technology 25/50 Index. Its holdings count sits at 288, providing a wider reach into mid- and small-cap names than its counterpart. Its largest positions include Nvidia at 16.1%, Apple at 14.3%, and Microsoft at 8.4%. The portfolio is nearly entirely focused on the technology sector and was launched in 2013. Fidelity MSCI Information Technology Index ETF has paid $1.00 per share over the trailing 12 months, which on its recent ~$273.89 share price works out to a 0.40% yield.

The iShares U.S. Technology ETF seeks results corresponding to the Russell 1000 Technology RIC 22.5/45 Capped Index with 149 holdings. This more concentrated approach gives higher weighting to its largest members. Its largest positions include Nvidia at 13.1%, Apple at 12.9%, and Microsoft at 8.8%. While its specific sector breakdown is not reported, it similarly concentrates on domestic technology leaders. 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 ~$243.48 share price works out to a 0.10% yield.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

Technology stocks have driven the overall market higher over the last few years, and if you already own a broad-market ETF, like one that tracks the S&P 500, you likely already have exposure to the sector’s biggest names. But it may also make sense to concentrate some investment dollars to the tech theme specifically, and the FTEC and IYW ETFs are two good options.

Although they track different indexes, you’ll notice that their top holdings are the same. The differences between the two funds come down to the indexes they track and their allocation strategies. FTEC holds about twice as many securities as IYW, which gives it greater diversity and a bit more stability, as other stocks in the fund can make up for one or two stumbles.

Over the long term, IYW’s narrower approach may juice slightly higher returns, but for most passive investors, FTEC’s broader portfolio, lower fees, and higher dividend payout give it the edge in this head-to-head matchup.

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.