Investing in the stock market can be difficult. After all, there are tens of thousands of investment options for you to choose from. So where is the best place to start?
In my opinion, exchange-traded funds (ETFs) offer something for everyone. They are a great place for new investors to start. However, an experienced investor can often find an ETF that helps round out their portfolio or increase their returns.
So let’s take a look at three technology ETFs that I think are worth considering for growth-oriented investors.
Technology Selection Sector SPDR Fund
The first is the Technology Selection Sector SPDR Fund (NYSEMKT:XLK). This ETF is one of the largest technology ETFs in the world, with over $65 billion in net assets. What’s more, with a history dating back to the 1990s, this is one of the oldest technology ETFs on the market.
Key holdings include Microsoft, Litter, Nvidia, BroadcomIt is Advanced Micro Devices. However, potential investors need to be aware of how heavy these holdings are; Microsoft and Apple alone represent 42% of the fund’s global holdings.
| Company Name | Symbol | Percentage of assets |
|---|---|---|
| Microsoft | MSFT | 22.9% |
| Litter | AAPL | 19.3% |
| Broadcom | AVGO | 4.5% |
| Nvidia | NVDA | 4.5% |
| Advanced microdevices | OMG | 3.1% |
| Sales force | CRM | 3.1% |
| Adobe | ADBE | 2.4% |
| Accenture | ACN | 2.3% |
| Cisco Systems | CSCO | 2.1% |
| Oracle | ORCL | 2.1% |
As far as performance is concerned, the fund generated a incredible Compound annual growth rate (CAGR) of 20.3% over the last decade, easily surpassing the S&P 500CAGR of 12.5% in the same period.
Additionally, the fund’s expense ratio of 0.09% is excellent. It’s one of the lowest expense ratios available for a sector-focused ETF and means investors will pay just $9 per year for every $10,000 invested in the fund.
VanEck Semiconductors ETF
The next one is VanEck Semiconductors ETF (NASDAQ:SMH). As the name implies, this fund focuses on all facets of the semiconductor sector, including chip designers, manufacturers and foundries.
With semiconductors now appearing in more places than ever before – your smartphone, your car, maybe even your refrigerator – it’s been a great time to own semiconductor stocks. As a result, the VanEck Semiconductor ETF has seen an incredible CAGR of 27.2% since 2014.
The fund’s top holdings include Nvidia, Informationand Broadcom.
| Company Name | Symbol | Percentage of assets |
|---|---|---|
| Nvidia | NVDA | 20.6% |
| Taiwan semiconductor manufacturing company | TSM | 11.9% |
| Broadcom | AVGO | 7.7% |
| ASML participation | ASML | 4.9% |
| Texas Instruments | TXN | 4.6% |
| QUALCOMM | QCOM | 4.6% |
| Information | INTC | 4.5% |
| Lam Search | LRCX | 4.5% |
| Micron | ONE | 4.4% |
| Applied Materials | LOVE | 4.4% |
Furthermore, the rapid growth of artificial intelligence (AI) applications – and the need for fast, powerful semiconductors behind them – means the future looks bright for chipmakers.
As for costs, the fund’s investors value an expense ratio of 0.35%. While this isn’t terrible, it’s also not the lowest rate available for technology sector ETFs. In other words, you pay for quality when it comes to this ETF.
Invesco QQQ Trust
The last one is the Invesco QQQ Trust (NASDAQ:QQQ). Now, strictly speaking, this fund is not a purely technology ETF; its holdings include shares such as Costco, PepsiCoIt is Marriot International.
However, more than 50% of its holdings are technology companies, which means that in my opinion it qualifies as a technology sector ETF. Additionally, this fund, also known as “QQQs”, is one of my favorite ETFs. Here’s why:
The reason it is not overly diversified is that the fund tracks the Nasdaq 100 index. This index comprises non-financial stocks listed on the Nasdaq exchange, weighted by market value, with some modifications. In other words, it is similar to the S&P 500 index, but slightly smaller, with a greater concentration of technology stocks and no financial stocks.
Key holdings include many of the Magnificent Seven, among others:
| Company Name | Symbol | Percentage of assets |
|---|---|---|
| Microsoft | MSFT | 8.8% |
| Litter | AAPL | 7.6% |
| Nvidia | NVDA | 5.8% |
| Alphabet | GOOG/GOOGL | 5.4% |
| Amazon | AMZN | 5.3% |
| Metaplatforms | GOAL | 5% |
| Broadcom | AVGO | 4.4% |
| Tesla | TSLA | 2.4% |
| Costco | COST | 2.3% |
| Advanced microdevices | OMG | 1.8% |
In terms of performance, the fund has delivered a CAGR of 18.4% over the past ten years, which far exceeds the returns of the S&P 500, the Dow Jones Industrial Average and the Russell 2000.
Lastly, its expense ratio is reasonable: 0.20% – meaning investors pay $20 per year for every $10,000 invested.
In short, each of these technology-oriented ETFs offers something unique, but they are all worth considering for investors looking for growth.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has held roles at Adobe, Alphabet, Amazon, Invesco QQQ Trust, Nvidia and Tesla. The Motley Fool has positions and recommends ASML, Accenture Plc, Adobe, Advanced Micro Devices, Alphabet, Amazon, Apple, Applied Materials, Cisco Systems, Costco Wholesale, Lam Research, Meta Platforms, Microsoft, Nvidia, Oracle, Qualcomm, Salesforce, Fabrication semiconductor companies from Taiwan, Tesla and Texas Instruments. The Motley Fool recommends Broadcom, Intel, and Marriott International and recommends the following options: long January 2025 calls for $290 on Accenture Plc, long January 2025 calls for $45 on Intel, long January 2026 calls for $395 on Microsoft, short January 2025 $310 calls on Accenture Plc, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
3 Magnificent Tech ETFs to Buy with $10,000 and Hold Forever was originally published by The Motley Fool
