Is XLK the Best Tech ETF You Can Buy?
Key Points
State Street Technology Select Sector SPDR ETF offers a significantly lower expense ratio and higher dividend yield than iShares U.S. Technology ETF.
iShares U.S. Technology ETF holds 139 securities compared to the more concentrated 72-stock portfolio of State Street Technology Select Sector SPDR ETF.
State Street Technology Select Sector SPDR ETF has delivered higher 1-year total returns and experienced a lower maximum drawdown over the last five years.
- 10 stocks we like better than Select Sector SPDR Trust - State Street Technology Select Sector SPDR ETF ›
State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) provides lower-cost access to S&P 500 tech leaders, while iShares U.S. Technology ETF (NYSEMKT:IYW) offers broader exposure across a larger pool of domestic tech companies.
Investors seeking to capitalize on the dominance of big tech often find themselves choosing between these two industry giants. While both target the technology sector, their underlying indices and cost structures differ materially, impacting everything from concentration risk to total return potential over the long term.
Snapshot (cost & size)
| Metric | IYW | XLK |
|---|---|---|
| Issuer | iShares | SPDR |
| Expense ratio | 0.38% | 0.08% |
| 1-yr return (as of June 3, 2026) | 59.50% | 66.90% |
| Dividend yield | 0.10% | 0.40% |
| Beta | 1.35 | 1.33 |
| AUM | $25.6 billion | $127.7 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.
The State Street fund is significantly more affordable, sporting an expense ratio of just 0.08% compared to 0.38% for the iShares fund. Additionally, the State Street fund currently provides a higher payout with its 0.40% yield.
Performance & risk comparison
| Metric | IYW | XLK |
|---|---|---|
| Max drawdown (5 yr) | (39.40%) | (33.60%) |
| Growth of $1,000 over 5 years (total return) | $2,802 | $2,912 |
What's inside
State Street Technology Select Sector SPDR ETF (NYSEMKT:XLK) focuses strictly on technology companies within the S&P 500, resulting in a more concentrated portfolio of 72 holdings. Its sector allocation is 100.00% technology, and its largest positions include Nvidia (NASDAQ:NVDA) at 13.30%, Apple (NASDAQ:AAPL) at 11.37%, and Microsoft (NASDAQ:MSFT) at 8.05%. Launched in 1998, the fund has paid $0.76 per share over the trailing 12 months.
iShares U.S. Technology ETF (NYSEMKT:IYW) casts a wider net with 139 holdings and was launched in 2000. Its top holdings include Nvidia at 14.79%, Apple at 13.20%, and Alphabet (NASDAQ:GOOGL) at 6.19%. It shares several top holdings with its competitor but includes a broader range of U.S. tech stocks and has a trailing-12-month dividend of $0.27 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
When it comes to tech ETFs, there are a handful of stalwarts, and these are two of them. But which is the best?
The State Street Technology Select Sector SPDR ETF is a more concentrated portfolio that focuses on technology stocks within the S&P 500 only, while the iShares U.S. Technology ETF casts a wider net, looking at technology stocks within the Russell 1000. So, it includes both large-caps and mid-caps.
XLK has been the better performer year-to-date and over the past year by a significant margin. Its one-year total return is about 67% compared to around 59% for IYW. Over longer time frames, their five- and 10-year returns are roughly similar.
If you are looking for a more diversified portfolio of tech stocks that inlcudes mid-caps, then IYW might be preferable. But ultimately, XLK looks like the better option, mainly due to its lower fees. It has an expense ratio of just 0.08% compared to 0.38% for IYW.
Should you buy stock in Select Sector SPDR Trust - State Street Technology Select Sector SPDR ETF right now?
Before you buy stock in Select Sector SPDR Trust - State Street Technology Select Sector SPDR ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Select Sector SPDR Trust - State Street Technology Select Sector SPDR ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,632!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,316,532!*
Now, it’s worth noting Stock Advisor’s total average return is 959% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of June 4, 2026.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
Recommended Articles
