The Vanguard Information Technology ETF (VGT 2.89%) and the Fidelity MSCI Information Technology ETF (FTEC 2.90%) offer very similar sector exposure and costs, but VGT stands out for holding more stocks and trading with higher liquidity.

Both VGT and FTEC track the U.S. technology sector, aiming to provide diversified exposure to leading companies in the space. With nearly identical sector allocations and performance, the choice may come down to factors like assets under management (AUM), trading volume, and brand preference.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

The difference in fees is negligible, with FTEC being marginally more affordable at 0.08% versus 0.09%. Both funds currently offer roughly the same dividend yield, so cost and payout are essentially equal for most investors.

Performance & risk comparison

What's inside

VGT delivers exposure to U.S. technology stocks with a portfolio of 314 holdings. Its largest positions are Nvidia, making up 18.18% of the fund's total assets, Apple at 14.29%, and Microsoft at 12.93%. With a fund age of close to 22 years and no notable quirks, VGT offers broad coverage and deep liquidity.

FTEC is similarly concentrated, with top holdings of Nvidia at 16.61%, Apple at 15.31%, and Microsoft at 12.42%. The main difference is FTEC's slightly smaller roster of 289 stocks and its shorter track record of around 12 years.

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What this means for investors

VGT and FTEC are similar in many ways. They both provide exposure to all corners of the tech industry, with the same top three holdings.

Their dividend yields and expense ratios are close to identical, and they've earned incredibly similar returns over the last 12 months and the past five years. With similar betas and max drawdowns, they've also experienced roughly the same levels of volatility. VGT contains a few more stocks than FTEC, however, making it marginally more diversified.

The most significant difference between these two ETFs is their AUM. VGT is significantly larger, with an AUM of around $130 billion compared to just under $17 billion for FTEC.

AUM may not make a meaningful difference for long-term investors who don't plan on selling their investment anytime soon. However, a higher AUM can result in greater liquidity, making it easier to buy and sell. Again, AUM may not be a dealbreaker for many long-term ETF investors, but as one of the few differentiators between these very similar funds, it's a factor to consider.

Glossary

ETF: Exchange-traded fund; a fund that trades on stock exchanges, holding a basket of securities.
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 price.
Beta: A measure of a fund's volatility compared to the overall market, often the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.
Sector exposure: The proportion of a fund's assets invested in specific industry sectors.
Liquidity: How easily a fund or security can be bought or sold without affecting its price.
Fund age: The length of time since a fund was launched.
Issuer: The company or financial institution that creates and manages an ETF or mutual fund.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Portfolio holdings: The individual securities or assets that make up a fund's investment portfolio.