How Vanguard Information Technology ETF and Fidelity MSCI Information Technology ETF Navigate the Tech Sector in Different Ways

• FTEC and VGT deliver near-identical exposure, sector weights, and top holdings within U.S. technology stocks
• VGT manages a far larger asset base and trades with higher liquidity, but charges a nearly identical expense ratio to FTEC
• Both ETFs show similar recent returns and risk profiles, with negligible differences in yield and drawdown

Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) and Vanguard Information Technology ETF (NYSEMKT:VGT) offer broad, low-cost access to the U.S. tech sector, but VGT stands out for its much larger assets under management and deeper trading liquidity, while FTEC is marginally less expensive.

Both funds track U.S. technology stocks, providing diversified exposure to industry giants with similar sector allocations and returns. This comparison looks at how FTEC and VGT stack up on cost, risk, composition, and trading factors to help investors weigh which may better fit their needs.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

FTEC is slightly more affordable on fees at 0.08%, while VGT charges 0.09%. Dividend yields are identical at 0.4%, so cost-conscious investors may notice only a negligible expense difference.

Performance & risk comparison

Over the past five years, both funds experienced similar maximum drawdowns (around 35%).

What's inside

Vanguard Information Technology ETF (NYSEMKT:VGT) holds 310 stocks focused almost entirely on U.S. technology, with minor weights in communication services and financials. Its top holdings, such as NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), mirror the sector’s leaders. With over 21 years in operation, VGT uses a blend of full replication and sampling techniques to track its benchmark, offering comprehensive coverage of the electronics and computer industries.

Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) provides exposure to the same sector mix and leading companies, including Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Apple (NASDAQ:AAPL). Both funds carry no structural quirks and aim to reflect the broad performance of large U.S. tech firms.

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Foolish take

Vanguard Information Technology ETF and Fidelity MSCI Information Technology Index ETF both sit squarely in the heart of the U.S. technology sector, yet each captures that landscape through a distinct lens. They draw from the same universe of industry leaders and often move in the same direction, but the way each fund is built can shape investors' experience that exposure. When two ETFs follow similar benchmarks, the meaningful differences usually come from their structure rather than their holdings.

VGT has evolved into one of the sector’s dominant vehicles. Its scale brings meaningful advantages: greater liquidity, tighter trading spreads, and the ability to handle large flows without disrupting execution. That edge matters in technology, a sector that can swing sharply during both rallies and pullbacks. FTEC offers almost the same exposure at a slightly lower cost, and it naturally fits investors who use the Fidelity platform. Because FTEC is much smaller, it does not offer the same trading depth or stability when volume increases or volatility rises.

Both ETFs aim to provide investors with broad exposure to the companies shaping modern technology. For investors, the difference lies in how confidently each fund can anchor a long-term position. Fidelity MSCI Information Technology Index ETF is a lean, and efficient choice for investors who prefer Fidelity’s structure. Vanguard Information Technology ETF 's larger scale and stronger liquidity profile serves as a more effective primary allocation within the technology sector. Over longer horizons, those structural qualities often matter as much as the index they track.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges and holds a basket of assets.
Expense ratio: Annual fee, as a percentage of assets, that investors pay to cover a fund’s operating costs.
Assets under management (AUM): The total market value of assets a fund manages on behalf of investors.
Liquidity: How easily and quickly an asset or security can be bought or sold without affecting its price.
Dividend yield: Annual dividends paid by a fund or stock, shown as a percentage of its current price.
Beta: A measure of a fund’s volatility compared to the overall market, typically the S&P 500.
Drawdown: The percentage decline from a fund’s peak value to its lowest point over a specific period.
Full replication: An index-tracking method where a fund holds all securities in the benchmark index in the same proportions.
Sampling technique: A method where a fund holds a representative sample of securities from an index, not every single one.
Sector allocation: The distribution of a fund’s investments across different industry sectors.
Benchmark: A standard or index used to measure a fund’s performance.
Total return: The investment’s price change plus all dividends and distributions, assuming those payouts are reinvested.

Eric Trie has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.