Which Tech ETF Wins for Your Portfolio, Fidelity's FTEC or Vanguard's VGT?

The Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) and the Vanguard Information Technology ETF (NYSEMKT:VGT) are nearly identical in strategy, but VGT offers massive scale while FTEC provides a slightly lower expense ratio.

Both funds serve as primary vehicles for investors seeking deep exposure to the U.S. technology sector. While they track different underlying indices, the end results for portfolios are remarkably similar, capturing the largest software, hardware, and semiconductor companies driving modern digital infrastructure and artificial intelligence innovation. This comparison helps determine if the massive scale of the Vanguard fund or the slightly lower cost of the Fidelity fund provides a better fit for a diversified portfolio.

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 MSCI Information Technology Index ETF carries an expense ratio of 0.08%, making it slightly more affordable than the 0.09% charged by the Vanguard Information Technology ETF. While a 0.01 percentage point difference is marginal, it can lead to lower friction for long-term investors. Both funds offer a dividend yield of 0.4%, reflecting the tech sector's focus on capital reinvestment over shareholder payouts.

Performance & risk comparison

What's inside

The Vanguard Information Technology ETF tracks its benchmark through a passive, full-replication strategy, holding 310 stocks. Its sector allocation is dominated by technology at 98%, followed by communication services at 1%. Its largest positions include Nvidia (NASDAQ:NVDA) at 16.79%, Apple (NASDAQ:AAPL) at 15.27%, and Microsoft (NASDAQ:MSFT) at 9.88%. It may implement a sampling strategy if regulatory constraints arise, though it currently aims to hold all index constituents. The fund was launched in 2004. The Vanguard Information Technology ETF has paid $0.43 per share over the trailing 12 months, which on its recent ~$118 share price works out to a 0.4% yield.

The Fidelity MSCI Information Technology Index ETF holds 294 stocks, aiming to replicate the MSCI USA IMI Information Technology 25/50 Index. This portfolio is heavily concentrated with technology at 99% and industrials at 1%. Top holdings include Nvidia at 17.03%, Apple at 16.10%, and Microsoft at 8.83%. As part of the Fidelity lineup of low-cost sector funds, it offers broad exposure to small- and mid-cap tech firms alongside its heavy mega-cap tilt. The fund was launched in 2013. The Fidelity MSCI Information Technology Index ETF has paid $1.00 per share over the trailing 12 months, which on its recent ~$281 share price works out to a 0.4% yield.

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

What this means for investors

For investors seeking exposure to the hot technology sector, both the Vanguard Information Technology ETF (VGT) and Fidelity MSCI Information Technology Index ETF (FTEC) are solid choices. This pair of funds are nearly identical, so deciding which one to pick comes down to a few factors specific to the individual investor’s situation.

If you are already a customer of Fidelity or Vanguard, it makes sense to pick the ETF that matches your brokerage account. However, VGT offers a larger AUM, a sign of its popularity, and its trading volume reached nearly four million compared to FTEC’s far lower 229,000 as of July 10.

This factor makes a huge difference if you want to trade options on either of these funds. VGT is an institutional-grade ETF that offers tighter bid-ask spreads thanks to its high liquidity and trading volume. Consequently, it’s much cheaper for active investors. FTEC’s low volume makes it a poor choice for options traders.

Robert Izquierdo 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.