FTEC vs. IYW: Is the Better Tech ETF Buy Also the Cheaper One?

The MSCI Information Technology Index ETF (NYSEMKT:FTEC) provides importantly cheaper entree to the wide exertion assemblage than the iShares U.S. Technology ETF (NYSEMKT:IYW) and produces astir identical 1-year returns.

Both ETFs people the home tech landscape, providing dense vulnerability to the manufacture giants driving existent marketplace trends.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

FTEC is the little costly option, with an disbursal ratio of 0.08% compared to IYW's 0.38%. It besides provides a higher payout -- FTEC's dividend output stands astatine 0.33%, 3 times higher than IYW's 0.11% yield.

Performance & hazard examination

What's wrong

The Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) holds 287 securities focused connected the exertion sector. Its largest positions see Nvidia (NASDAQ:NVDA) astatine 16.7%, Apple (NASDAQ:AAPL) astatine 14.5%, and Microsoft (NASDAQ:MSFT) astatine 9.4%. This money was launched successful 2013.

By contrast, the iShares U.S. Technology ETF (NYSEMKT:IYW) maintains a leaner portfolio of 139 holdings. Its largest positions see Nvidia astatine 14.8%, Apple astatine 13.5%, and Alphabet (NASDAQ:GOOGL) astatine 12.1%. IYW was launched successful 2000.

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What This Means for Investors

For mundane investors trying to determine betwixt 2 akin tech ETFs, outgo is often the deciding origin -- and here, FTEC wins by a wide margin.

The 0.30 percentage-point disbursal ratio spread betwixt FTEC and IYW whitethorn look small, but implicit clip that tin compound meaningfully. Assuming identical returns, an capitalist would support importantly much wealth successful their pouch with FTEC implicit a 10- oregon 20-year holding play simply by paying little successful yearly fees.

That said, some funds archer a akin communicative astir wherever the tech assemblage stands today: heavy concentrated successful a fistful of mega-cap names. Nvidia, Apple, and Microsoft unneurotic correspond much than 40% of FTEC's portfolio and a likewise ascendant stock of IYW's -- a reminder that investing successful either money means placing a ample stake connected a tiny fig of companies continuing to pb the market.