VGT vs XLK Two Popular Technology ETFs

When comparing VGT vs XLK, it’s important to consider factors such as performance, expense ratio, and holdings. By taking a closer look at these metrics, investors can make a more informed decision about which ETF is the best fit for their portfolio.

One of the main differences between VGT and XLK is their composition. VGT includes both mid-cap and small-cap stocks, while XLK is focused solely on large-cap technology companies.

This means that VGT may offer more diversification and potentially higher returns, but may also come with higher risk. On the other hand, XLK may be a more conservative option for investors looking for exposure to established tech giants.

Key Takeaways VGT vs XLK

  • VGT and XLK are two popular ETFs that provide exposure to the technology sector, but have some key differences in their composition and risk profile.
  • When comparing VGT and XLK, investors should consider factors such as performance, expense ratio, and holdings to make an informed decision.
  • Ultimately, the best ETF for an investor will depend on their individual goals, risk tolerance, and investment strategy.

Overview of VGT vs XLK

Investors looking to gain exposure to the technology sector have a variety of options to choose from, including exchange-traded funds (ETFs).

Two popular choices are the Vanguard Information Technology ETF (VGT) and the Technology Select Sector SPDR Fund (XLK). While both funds provide exposure to the technology sector, they have some key differences that investors should be aware of.

Definition of VGT vs XLK

VGT and XLK are two popular exchange-traded funds (ETFs) that track the performance of the technology sector in the United States.

VGT is managed by Vanguard and tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index, while XLK is managed by State Street Global Advisors and tracks the performance of the S&P Technology Select Sector Index.

Both ETFs provide investors with exposure to a diversified portfolio of technology stocks.

Key Differences Between VGT vs XLK

When considering investment decisions between VGT and XLK, there are a few key differences to keep in mind. One of the most significant differences is the expense ratio.

VGT has a lower expense ratio of 0.10%, while XLK’s expense ratio is 0.12%. This difference may not seem significant, but over time, it can add up and impact portfolio growth.

Another difference between VGT and XLK is the number of stocks they hold. VGT holds 328 stocks, while XLK holds 74 stocks.

VGT is more diversified, which can provide investors with more security in their investments. However, XLK’s holdings and assets are more concentrated, which can lead to higher returns if the top holdings perform well.

Past performance is another factor to consider when comparing VGT and XLK. Over the past 10 years, VGT has had an annualized return of 20.14%, while XLK has had an annualized return of 19.84%.

Additionally, VGT has a higher Sharpe ratio, which measures risk-adjusted returns, than XLK.

When it comes to dividends, VGT has a slightly higher dividend yield than XLK. VGT’s dividend yield is 0.63%, while XLK’s dividend yield is 0.54%. However, it’s important to note that both ETFs are not primarily focused on providing dividends to investors.

Performance Comparison of VGT vs XLK

Historical Performance of VGT vs XLK

Both VGT and XLK are technology-focused ETFs that aim to provide investors with exposure to the US technology sector. VGT tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index, while XLK tracks the performance of the Technology Select Sector Index.

Over the past 5 years, both VGT and XLK have delivered strong returns to investors. VGT has an annualized return of 28.05%, while XLK has an annualized return of 24.81%. However, it’s important to note that past performance does not guarantee future results.

Comparison of VGT vs XLK Returns

When it comes to returns, VGT has outperformed XLK over the past 5 years. In 2021, VGT had a total return of 41.37%, while XLK had a total return of 37.23%. Additionally, VGT has a higher Sharpe ratio than XLK, indicating that it has delivered higher returns for the level of risk taken.

VGT vs XLK Portfolio Growth

Both VGT and XLK are diversified ETFs, with VGT having exposure to 330 holdings and XLK having exposure to 73 holdings. VGT has a higher dividend yield than XLK, with a yield of 0.87% compared to XLK’s yield of 0.97%.

When it comes to portfolio growth, VGT has outperformed XLK over the past 5 years. If an investor had invested $10,000 in VGT in June 2016, their investment would be worth $49,539 as of June 2021.

On the other hand, if the same investor had invested $10,000 in XLK in June 2016, their investment would be worth $37,057 as of June 2021.

Expense Ratio And Holdings Comparison

Expense Ratio Comparison of VGT vs XLK

Expense ratio is an important factor to consider when comparing ETFs. VGT has an expense ratio of 0.10%, which is lower than XLK’s expense ratio of 0.13%.

This means that VGT is slightly cheaper to own than XLK. However, both ETFs have relatively low expense ratios when compared to the average expense ratio of all ETFs.

Holdings Comparison of VGT vs XLK

VGT and XLK are both focused on the information technology sector. VGT is managed by Vanguard and tracks the performance of an information technology index fund, the MSCI US Investable Market Information Technology 25/50 Index.

XLK, on the other hand, is managed by State Street Global Advisors and tracks the Technology Select Sector SPDR Fund.

VGT has a total of 332 holdings, while XLK has 73 holdings. This means that VGT is more diversified than XLK. VGT’s top holdings include Apple, Microsoft, and Nvidia, while XLK’s top holdings include Apple, Microsoft, and Amazon.

In terms of annual returns of growth, VGT has a higher growth rate than XLK. VGT has a 5-year average annual return of 27.19%, while XLK has a 5-year average annual return of 25.60%.

VGT vs XLK Security Comparison

Security Comparison of VGT vs XLK

VGT and XLK are two popular ETFs that track the performance of the technology sector in the US market.

VGT is managed by Vanguard and tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index. XLK, on the other hand, is managed by State Street Global Advisors and tracks the performance of the Technology Select Sector Index.

When it comes to comparing the security of VGT and XLK, there are several factors that investors should consider. One of the key differences between the two ETFs is their dividend yield. As of June 2023, XLK has a slightly higher dividend yield of 0.97%, compared to VGT’s 0.87%.

Another important factor to consider is the diversification of each ETF. VGT holds a total of 338 stocks, while XLK holds 75 stocks.

However, XLK’s top holdings are more diversified, with the top five holdings accounting for 46.5% of the portfolio, compared to VGT’s top five holdings, which account for 55.7% of the portfolio.

In terms of the number of stocks held, VGT is more diversified than XLK, which could offer investors more exposure to smaller cap and mid-cap companies. However, XLK’s larger cap focus could offer more stability and less volatility.

VGT vs XLK: Buy, Sell or Hold?

When it comes to deciding whether to buy, sell, or hold VGT or XLK, investors should consider their investment goals and risk tolerance. Both ETFs offer significant exposure to the technology sector, but they have different levels of diversification and risk.

Investors who are looking for more diversification and exposure to smaller cap and mid-cap companies may prefer VGT. On the other hand, investors who are looking for a more stable investment with less volatility may prefer XLK.

Before you go…

Facts And Questions

Q: Which ETF is better than VGT?

A: It depends on individual preferences and investment goals. Different ETFs offer alternative sector exposures and strategies. Thorough research is necessary to identify suitable options.

Q: Is XLK better than QQQ?

A2: It depends on individual investment objectives. XLK focuses on technology sector stocks, while QQQ tracks the Nasdaq-100 Index. The choice should align with specific goals and preferences.

Q: Is VGT Still A Good Buy?

A: Thorough analysis of market conditions, risk metrics, individual goals, and risk tolerance is required to determine if VGT is a good buy. Careful research and evaluation are recommended.

Q: Is VOO Or VGT Better?

A: The choice depends on individual preferences. VOO offers broad U.S. market exposure, while VGT focuses on the technology sector. Consider diversification needs and desired market exposure.

Q: Is XLK A Good Long-Term Investment?

A: Assessing XLK as a long-term investment requires considering individual goals and risk tolerance. XLK provides technology sector exposure, but thorough research and market analysis are important.

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