Technology stocks and tech ETFs will generally benefit when investors take a "risk-on" approach to the market.
Driving recent upside has been exuberant demand for all things having to do with generative artificial intelligence (AI) – demand that has helped AI bellwether Nvidia (NVDA) gain about $3 trillion in market value over the past two years.
But it's not just Nvidia.
Indeed, investors' insatiable appetite for risk drove major gains in many Big Tech stocks, dubbed the Magnificent 7, and carried the broader stock market back into record-high territory.
Outperformance is no guarantee of future returns, of course. And a late-July selloff in technology stocks had many questioning if the AI trade rallied too far too fast.
But the sector has recovered from its summer doldrums. And there's no denying that tech is a major driving force for the broader market. Investors should remember too that pullbacks happen and are normal in bull markets.
"Every investor should always have some dry powder either in cash or in U.S. Treasuries so that they are able to take advantage of any pullbacks, which are buying opportunities for long-term investors," says Robert Schein, chief investment officer at Blanke Schein Wealth Management.
Those who want to use that cash to gain exposure to the longer-term tech momentum can home in on individual stocks. But a lower-risk approach is to buy technology exchange-traded funds, whose risk is spread across dozens if not hundreds of stocks.
With that in mind, here are nine of the best tech ETFs to buy now. The names featured here are some of the top exchange-traded funds to buy for those looking to participate in the growth of the entire sector, or even smaller industry trends like cybersecurity and AI, while minimizing the risk of single-stock implosions.
Data is as of October 24.
Invesco QQQ Trust
- Assets under management: $298.0 billion
- Dividend yield: 0.6%
- Expenses: 0.20%, or $20 annually for every $10,000 invested
Though not technically a dedicated technology fund, the sheer size of the Invesco QQQ Trust (QQQ, $492.32) makes it worth a look.
This massive index fund is benchmarked to the Nasdaq-100, a group of the largest companies that are listed on this innovative exchange. And, unsurprisingly, technology accounts for more than 50% of QQQ via several trillion-dollar Nasdaq-listed companies like Microsoft (MSFT), Apple (AAPL) and Nvidia.
In fact, these three blue chip stocks alone account for roughly 25% of the entire portfolio. Furthermore, the next largest sector is communication services at 16% or so. This includes digital companies such as Google parent Alphabet (GOOGL) that technically fall into that bucket rather than traditional tech.
You'll still get a smattering of stocks in various other sectors, but if you want to lean into technology via a diversified ETF instead of a laser-focused sector fund, QQQ is worth a look. And the Invesco QQQ Trust is one of the most popular and liquid tech ETFs, so you'll be in very good company.
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Vanguard Information Technology ETF
- Assets under management: $78.8 billion
- Dividend yield: 0.5%
- Expenses: 0.10%
The Vanguard Information Technology ETF (VGT, $599.12) is a heavily diversified but still dedicated tech-sector fund.
VGT has many of the same benefits as QQQ, including an outsized focus on Big Tech icons like Apple and Microsoft. With $79 billion in assets, it's also incredibly liquid and established. And, at an annual expense ratio of just 0.10%, it's one of the best cheap ETFs out there.
The big difference here is that this Vanguard ETF is wholly dedicated to tech stocks, with 100% of the portfolio in that sector.
Interestingly, VGT is even more top-heavy on the trillion-dollar Dow Jones stocks, with some 30% of assets dedicated to Apple and Microsoft. This is because the Vanguard Information Technology ETF weights its individual stocks by their respective sizes.
Keep this in mind if you're looking to play the tech sector since the performance (or underperformance) of one of these top stocks could have an outsized influence on the movement of this ETF.
That said, there are 314 other positions in this tech fund. VGT is by far the largest of the tech ETFs on Wall Street, more than three times larger than its closest peer. If you want a simple and easy way to play the broad trends in technology, VGT might be your best bet.
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MicroSectors FANG+ ETN
- Assets under management: $381.7 million
- Dividend yield: 0.00%
- Expenses: 0.58%
Moving away from diversification, the MicroSectors FANG+ ETN (FNGS, $50.95) is a unique offering that allows investors to play a short list of leading technology companies.
Several years back, during the high-growth and "risk-on" days when tech was the undisputed king, pundits commonly used the FANG acronym as a stand-in for the momentum stocks of the day – Facebook, Amazon (AMZN), Netflix (NFLX) and Google.
The marketplace has evolved, including Facebook changing its name to Meta Platforms (META) and Google changing its name to Alphabet in the intervening years.
Still, this acronym remains shorthand for the biggest and most dynamic names in tech, and this fund is a way to stay focused on that elite list of leaders.
FNGS offers a focused list of just 10 total Big Tech holdings, including semiconductor stocks Broadcom (AVGO) and Nvidia as well as electric vehicle maker Tesla (TSLA). It rebalances quarterly to ensure that stocks stay at roughly a 10% allocation each.
As you can see from several of the funds on this list, it's not uncommon for even the best tech ETFs to be reliant on a short list of companies for the majority of their holdings. Rather than fill the portfolio with hundreds of stocks at tiny allocations, FNGS dives into the leaders of Silicon Valley and ignores the rest.
That can be risky, sure. But considering it is up nearly 60% in the past 12 months, this is a strategy that can also pay off when that short list of tech companies does well.
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First Trust NASDAQ Cybersecurity ETF
- Assets under management: $6.9 billion
- Dividend yield: 0.5%
- Expenses: 0.59%
Between the long-term shift toward a digital economy and the increased reliance on remote work and e-commerce in the wake of the COVID-19 pandemic, the stakes continue to get higher for cybersecurity with each passing year.
In fact, the total cost of cybercrime in 2024 is forecast to reach $9.5 trillion worldwide – yes, trillion with a T – and hit $10.5 trillion by 2025, according to Cybersecurity Ventures.
That means one area of the tech sector that's all but a sure thing these days are cybersecurity stocks. Market share continues to shift among the major players as they jockey for bigger pieces of the pie. But the pie itself is only getting larger.
The First Trust NASDAQ Cybersecurity ETF (CIBR, $60.91) is one of the best tech ETFs to play this trend and add exposure to software and IT companies that are beneficiaries of long-term cybersecurity spending growth.
There are currently only about 30 total holdings in CIBR. But this is a focused list of players in the space, including firewall software provider Palo Alto Networks (PANW) and enterprise tech mainstay Cisco Systems (CSCO), among others.
For investors seeking out the top tech funds, CIBR is a diversified way to play heightened awareness and increased spending on cybersecurity in the years ahead.
Russia's invasion of Ukraine prompted increased cyber risk for businesses and government institutions. And these threats, as well as those from non-state actors, continue to proliferate in an increasingly digital world.
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Ark Fintech Innovation ETF
- Assets under management: $905.4 million
- Dividend yield: 0.0%
- Expenses: 0.75%
The Ark Fintech Innovation ETF (ARKF, $31.42) is a tech ETF from asset manager Ark Invest that gives investors exposure to firms in mobile payments, digital wallets and blockchain technology.
Particularly as bitcoin gets some of its mojo back, now may be a great time to consider this technology fund with a dedicated focus on fintech stocks.
This is a global fund, holding anywhere from 35 to 55 total companies providing products or services that aim to reshape the way we pay for things and manage our money in a digital age.
Top holdings include digital payments companies like cryptocurrency trading platform Coinbase Global (COIN) as well as Canadian e-commerce service provider Shopify (SHOP), online food ordering platform Toast (TOST) and mobile-friendly investment platform Robinhood Markets (HOOD).
With the internet now decades old, it's not particularly innovative to do business on the web. Particularly after the pandemic, it's all but expected that most major merchants offer some kind of online transaction platform.
But the companies that make up the Ark Fintech Innovation ETF are thinking about the next generation of digital finance and how the global economy may evolve even more over the years to come. This is why ARKF is on this list of the best tech ETFs to watch going forward.
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iShares Semiconductor ETF
- Assets under management: $14.5 billion
- Dividend yield: 0.6%
- Expenses: 0.35%
Like cybersecurity, the semiconductor manufacturing industry has been soaring on excitement for all things generative AI. Semiconductors have also benefited from the 2022 CHIPS and Science Act, which is injecting $280 billion into development of the domestic industry.
Indeed, the iShares Semiconductor ETF (SOXX, $227.30) is up nearly 50% in the past 12 months.
The iShares fund, the largest ETF dedicated to the chip-making industry, is the most focused way to play U.S.-listed semiconductor stocks. Top holdings in SOXX include Nvidia, Broadcom and Advanced Micro Devices (AMD) as well as Texas Instruments (TXN) and Qualcomm (QCOM).
There's always a risk that supply-chain disruptions, which caused the industry to melt down in 2021, will happen again, or that consumer and business spending will dry up. But, based on recent momentum, SOXX is looking good for investors seeking out the best tech ETFs.
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ARK Next Generation Internet ETF
- Assets under management: $1.4 billion
- Dividend yield: 0.0%
- Expenses: 0.88%
The ARK Next Generation Internet ETF (ARKW, $88.28), another fund from Ark Invest, is a play on software-related technology opportunities rather than hardware ones.
As the name implies, this is a tech-focused fund that looks at the future of the digital economy through holdings such as payments processor Block (SQ), crypto asset exchange Coinbase Global, streaming media icon Roku (ROKU) and gaming giant Roblox (RBLX).
There's a lot of risk and potential disruption in the works here as well as a chance that some of these so-called transformative technologies don't live up to the hype.
But with roughly 60% gains in the past 12 months, there are clearly plenty of people on Wall Street who believe in the potential of these companies right now. And ARKW is one of the best tech ETFs to gain exposure to these firms.
One note, however: This ARK fund is actively managed, meaning a higher expense structure than some of the less tactical technology ETFs out here.
Given its recent outperformance, that may not bother many people. But in an environment where ARKW doesn't do much better than the broader market – or underperforms – it could be tough to stomach the fees that are between five times and 10 times most other funds on this list.
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Global X Robotics & Artificial Intelligence ETF
- Assets under management: $2.5 billion
- Dividend yield: 0.2%
- Expenses: 0.68%
Artificial intelligence and automation are emerging as a shift in the global economy. Investors seeking out the best ETFs to buy to play this new trend will certainly want to focus on the Global X Robotics & Artificial Intelligence ETF (BOTZ, $31.46) – the largest and most established fund in this space.
To be clear, this is not a play on development-stage companies that have grandiose plans to build supercomputers that think for us. Rather, this technology ETF is populated with the best AI stocks making real profits from next-generation technology already being sold today.
Representative examples include robotic surgery leader Intuitive Surgical (ISRG), sensor, global electronics conglomerate ABB (ABBNY) and barcoding leader Keyence (KYCCF).
Together, these three companies have a combined market cap of about $390 billion – so they're hardly risky startups that could flame out in the next year or two. And the fund's top position is AI leader Nvidia, with a 14% weighting.
With gains of about 35% over the past 12 months, this AI ETF has trailed the broader S&P 500, but only slightly.
And with increased focus on automation and AI to drive both efficiency as well as high-tech progress in all sectors of the economy, BOTZ could be in for even better days in the future.
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KraneShares CSI China Internet ETF
- Assets under management: $7.0 billion
- Dividend yield: 1.3%
- Expenses: 0.70%
The last on our list of the best tech ETFs is perhaps the most speculative of all. The KraneShares CSI China Internet ETF (KWEB, $31.80) is a global option dedicated to the high-risk but high-growth internet sector in China.
The good news is that even though many of the companies in the portfolio are China-listed rather than U.S.-listed, this fund is just as easy to buy in your brokerage account as your favorite blue chip stock. It's also well-established with $7 billion in assets, so this is not a fly-by-night operation.
Still, there's risk here as the top holdings are companies closely tied to spending trends in China, such as Meituan (MPNGY), Tencent Holdings (TCEHY) and Alibaba Group Holding (BABA).
There is real risk trading these Chinese stocks given the mainland's uncertain regulatory backdrop, but it's undeniable that the tech sector in this emerging market has much more room to grow than one in more established Western markets like the U.S.
For instance, data from Statista shows that roughly 1.0 billion people in China accessed the internet in 2021, but this represented just 72% of the population. By contrast, the U.S. had a 97% internet penetration rate in 2021.
There's still a lot of growth to be had in China, and that could translate into significant gains for the 30 or so stocks that make up this top technology ETF.
Learn more about KWEB from the KraneShares provider site.
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