Both the Vanguard Information Technology ETF (VGT 2.16%) and the Technology Select Sector SPDR Fund (XLK 1.86%) aim to capture the performance of leading U.S. technology companies. This side-by-side comparison spotlights their differences in diversification, cost, and recent performance.
Snapshot (cost & size)
| Metric | XLK | VGT |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.08% | 0.09% |
| 1-yr return (as of Oct. 27, 2025) | 29.9% | 30.6% |
| Dividend yield | 0.5% | 0.4% |
| Beta | 1.18 | 0.16 |
| AUM | $96.4 billion | $128.3 billion |
Beta measures price volatility relative to the S&P 500; figures use five-year weekly returns.
Both funds are nearly identical in cost, with XLK slightly more affordable at 0.08% versus VGT’s 0.09%. XLK also offers a slightly higher dividend yield, though the difference is only 0.1 percentage point as of Oct. 28, 2025.
Performance & risk comparison
| Metric | XLK | VGT |
|---|---|---|
| Max drawdown (5 y) | (33.56%) | (35.08%) |
| Growth of $1,000 over 5 years | $2,681 | $2,621 |
What's inside
The Vanguard Information Technology ETF holds about 310 stocks. Nearly all assets are in technology, with a small 1% tilt toward communication services. Top positions include NVIDIA (NVDA 2.13%), Apple (AAPL 1.45%), and Microsoft (MSFT 2.44%), each accounting for about 0.12% to 0.17% of the fund. VGT has a long track record, spanning 21.8 years.
The Technology Select Sector SPDR Fund is more concentrated, with only 68 holdings, focusing exclusively on the technology sector. Its portfolio is dominated by the same three giants—NVIDIA, Microsoft, and Apple—but with slightly different weights. XLK’s narrower focus may appeal to those seeking targeted exposure to established tech leaders without the added diversification of smaller names.
Foolish take
Despite a smaller roster of portfolio components, the Technology Select Sector SPDR Fund ETF has performed slightly better than the Vanguard Information Technology ETF. Over the past five years, the Technology Select Sector SPDR Fund has delivered a 181.8% total return. The Vanguard Information Technology ETF produced a 174.3% total return over the same time frame.
The top components are the same, but these two ETFs follow different market indexes. The Vanguard Information Technology ETF tracks the MSCI U.S. Investable Market Information Technology 25/50 index. The index includes stocks of large, medium-sized, and small U.S. companies in the information technology sector. The Technology Select Sector SPDR Fund also tracks information technology stocks, but it's limited to those in the S&P 500 index.
The nice thing about both of these funds is their extremely low expense ratios. They both exhibit low expense ratios of less than 0.1% because they passively track an index.
Glossary
ETF (Exchange-Traded Fund): An investment fund traded on stock exchanges, holding a basket of assets like stocks or bonds.
Diversification: Spreading investments across various assets to reduce risk.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility compared to the overall market; higher beta means greater risk.
AUM (Assets Under Management): The total market value of assets a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Growth of $1,000 over 5 years: The ending value of a $1,000 investment after five years, including price changes and dividends.
Blue-chip: Large, established, financially sound companies with a history of reliable performance.
Holdings: The individual securities or assets owned by a fund.
Sector: A group of companies in the same industry, such as technology or healthcare.
Track record: The historical performance history of a fund or investment.
For more guidance on ETF investing, check out the full guide at this link.
