FTEC vs. IYW: Which Tech ETF Is the Better Buy for Investors?
Key Points
Fidelity MSCI Information Technology Index ETF (FTEC) offers a lower expense ratio and a higher dividend yield than iShares U.S. Technology ETF (IYW).
Both funds are highly concentrated in the same top holdings, though FTEC provides more than double the total number of positions.
IYW has generated slightly higher cumulative growth over the last five years despite its higher management fee.
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Investors seeking exposure to the domestic tech sector often land on one of these two heavyweights: the iShares U.S. Technology ETF (NYSEMKT:IYW) or the Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC). Comparing these funds reveals two high-growth vehicles with similar performance but meaningfully different expense ratios and portfolio depth.
Snapshot (cost & size)
| Metric | IYW | FTEC |
|---|---|---|
| Issuer | iShares | Fidelity |
| Expense ratio | 0.38% | 0.08% |
| 1-year return (as of June 12, 2026) | 49.61% | 49.82% |
| Dividend yield | 0.11% | 0.33% |
| Beta | 1.43 | 1.41 |
| AUM | $25.2 billion | $21.4 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
FTEC is significantly cheaper with an expense ratio of 0.08% -- which is 0.30 percentage points lower than IYW. FTEC also offers a higher dividend yield of 0.33% vs. just 0.11% for IYW.
Performance & risk comparison
| Metric | IYW | FTEC |
|---|---|---|
| Max drawdown (5 yr) | (39.44%) | (34.95%) |
| Growth of $1,000 over 5 years (total return) | $2,559 | $2,441 |
What's inside
Launched in 2013, FTEC tracks a broad index of tech names, resulting in a deep portfolio of nearly 300 holdings. Its largest positions include Nvidia (NASDAQ:NVDA) at 16.7%, Apple (NASDAQ:AAPL) at 14.5%, and Microsoft (NASDAQ:MSFT) at 9.4%.
By comparison, IYW manages a more concentrated list of 139 holdings, targeting American firms that drive the tech industry. Its largest positions include Nvidia at 14.8%, Apple at 13.5%, and the combined share classes of Alphabet (NASDAQ:GOOGL) at 12.1%. This fund launched in 2000, giving it a longer track record than FTEC.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The better fund between these two options depends on your priorities. If cost efficiency and broader diversification matter most to you, FTEC makes a compelling case: its expense ratio of just 0.08% is one of the lowest available for a sector fund, and owning nearly 300 stocks means less exposure to any single company’s stumbles. For long-term investors who believe that costs compound just as surely as returns do, that 0.30 percentage point annual advantage -- however modest it sounds -- adds up meaningfully over a decade or more.
That said, IYW's slightly stronger five-year cumulative performance is worth acknowledging. Its more concentrated portfolio of 139 holdings can cut both ways -- it amplifies the impact of the fund’s top performers, but also leaves a little less room for error if those names hit turbulence. The fund's longer track record -- dating back to 2000 -- also means investors have more history to evaluate through multiple market cycles, including the dot-com bust, the 2008 financial crisis, and the pandemic-era tech surge.
Both funds share the same mega-cap tech anchors at the top, so the difference in day-to-day performance may feel subtle. But for investors who are cost-conscious or who want exposure to a wider swath of the tech sector, FTEC's deeper bench and lower fee likely make it the more investor-friendly option over the long run.
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Andy Gould has positions in Alphabet, Apple, and Nvidia and has the following options: long January 2027 $125 calls on Nvidia and short January 2027 $125 puts on Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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