7 Best Tech ETFs to Buy in 2025

The tech sector can be a fickle one. You can have years like 2022, when tech exchange-traded funds tumbled, immediately followed by a year they returned upward of 50%. While 2024 was not quite so kind, providing more modest returns in the range of 20% to 30% for many funds, the future may still be bright in 2025.

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Technology has been a resilient sector and it’s likely to remain relevant given our current world, says Jason Werner, accredited investment fiduciary and founder of Werner Financial. “Also, tech companies have been known for their rapid growth structures, making them attractive for investors to add into their portfolios.”

But not all tech companies succeed, and trying to cherry-pick winners can be a loser’s game. With the capacity to hold dozens or even hundreds of tech stocks, ETFs can be a smart alternative to stock picking even in the best of times. But you still need to do your research to find the best tech ETF for your portfolio.

While technology is likely to continue growing, not all funds are guaranteed the same success, Werner says. “We encourage investors to do their due diligence and research specific funds, as well as their underlying holdings before moving forward.”

Here are some leading tech ETFs to consider in 2025:

Tech ETF Expense Ratio
iShares U.S. Tech Independence Focused ETF (ticker: IETC) 0.18%
Technology Select Sector SPDR ETF (XLK) 0.09%
SPDR NYSE Technology ETF (XNTK) 0.35%
Vanguard Information Technology ETF (VGT) 0.1%
Fidelity MSCI Information Tech ETF (FTEC) 0.084%
iShares U.S. Technology ETF (IYW) 0.39%
Global X Artificial Intelligence & Tech ETF (AIQ) 0.68%

iShares U.S. Tech Independence Focused ETF (IETC)

IETC may not be the most well-known tech ETF on this list, but it’s highly regarded by Morningstar analysts. They give it five stars and a silver badge, indicating they have a high conviction the fund will outperform a relevant benchmark of its peers over a market cycle. No tech ETFs currently earn both five stars and a gold badge, and IETC is the only one to get five stars and a silver badge from Morningstar.

The ETF earns these accolades largely thanks to its strong management team, led by Jeff Shen who has 20 years of portfolio management experience. He and his co-managers use machine learning and big data to find U.S. tech companies that are “driving U.S. technological independence” and should prove “more resilient to geopolitical headwinds.”

The strategy has paid off over the past five years, with IETC beating both the Nasdaq 100 and Morningstar U.S. Tech Category average on a five-, three- and one-year basis. A low expense ratio of 0.18%, or $18 annually for every $10,000 you invest, also reduces headwinds of the cost variety.

Technology Select Sector SPDR ETF (XLK)

Ranked the No. 1 technology ETF by U.S. News and earning five stars and a bronze badge (indicating analysts are confident the fund will outperform) from Morningstar, the Technology Select Sector SPDR ETF is one to watch. It comes with a low 0.09% expense ratio.

XLK tracks the performance of the technology companies in the S&P 500. This narrows the index of 500 companies down to only 69 stocks. But these cover many aspects of the tech industry, from hardware and storage providers to semiconductors and IT services.

Since it’s an S&P 500 tech fund, you’ll see many familiar names in the portfolio, such as Apple Inc. (AAPL), Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT). The top 10 holdings cumulatively account for 62% of the total portfolio, so consider yourself warned that if you opt for this fund, you’ll be making a fairly concentrated bet.

That bet has paid off over the past 10 years, thanks to tech’s favoritism in the stock market. XLK returned over 20% in the past 10 years and over 56% in 2023 alone. Last year was less favorable to tech, but XLK still achieved nearly 22% in annual return. Just remember that favorites can fall out of favor at any time — such as what occurred in 2022, when XLK lost nearly 28%. Diversification is still the most reliable path to successful long-term investing.

SPDR NYSE Technology ETF (XNTK)

The SPDR NYSE Technology ETF holds 35 “leading” technology companies in its portfolio. It defines leading as companies that have a minimum market capitalization of $2 billion and a trailing three-month average daily trading value of $10 million. They must also meet revenue and sales criteria, such as having increased their sales over the past 12 months and revenues from the past four quarters that classify them within the top 75 tech companies designated by the index.

XNTK is required to have at least 75% of its assets from companies headquartered in the U.S. This gives it room to stretch around the globe. For instance, as of early January, it has more than 15% of its portfolio invested outside of the U.S.

That said, over a quarter of the portfolio is in the semiconductor sector at the moment. But only 31% of the fund’s assets are in its top 10 names, and no company represents more than 3.3% of the portfolio. A low turnover ratio also helps keep costs low for investors.

Morningstar gives the fund four stars and a gold badge, indicating the analysts have the highest conviction about its near-future outperformance. It’s also ranked the seventh-best technology ETF by U.S. News.

[READ: 2025 Investment Outlook]

Vanguard Information Technology ETF (VGT)

Perhaps the largest truly sector-specific technology ETF is VGT, with $84.7 billion in assets. It also earns five stars from Morningstar, but only a bronze badge. This means the analysts are still confident it will outperform in the near term — just not as confident as they are of the near-term performance of silver and gold badge funds. But honestly, it’s hard to go wrong with a Vanguard fund.

“Vanguard’s investor-first mentality remains its North Star,” writes Morningstar Senior Analyst Daniel Sotiroff. “It has invested heavily in its advice business and ETF lineup over the past several years.” The recent addition of former BlackRock executive Salim Ramji may boost the firm’s ETF lineup, and VGT is one of the best for low-cost investors.

This leading technology ETF is also one of the more inexpensive offerings, charging just 0.1% annually in fees. That said, you’re not getting a lot of sophistication here. As a passive fund, it simply tracks the MSCI US Investable Market Information Technology 25/50 Index, which aims to track U.S. tech stocks of all sizes. This leads to a portfolio of 316 stocks, but not the most diverse of offerings. The top 10 names represent 60% of total assets, with over 44% in Apple, Nvidia and Microsoft combined.

Fidelity MSCI Information Tech ETF (FTEC)

The Fidelity MSCI Information Tech ETF is ranked the second-best technology ETF by U.S. News. It’s also favored by Morningstar analysts, who give it five stars and a bronze badge.

It has certainly been a star performer over the past market cycle, returning over 53% in 2023 and over 29% in 2024. FTEC held up better than the overall Morningstar tech category in 2024, which returned less than 22%. Coupled with its low expense ratio of 0.084%, FTEC can be a real boost to your portfolio.

The fund tracks the MSCI USA IMI Information Technology Index, which covers the entire U.S. IT sector. This means it holds lesser-known tech companies, such as American business software company Palantir Technologies Inc. (PLTR) and technology and computational software company Cadence Design Systems Inc. (CDNS). However, the big names like Apple and Nvidia still dominate the fund, with over 60% in the top 10 names.

iShares U.S. Technology ETF (IYW)

This is the second iShares fund on this list and for good reason. The company behind the funds, BlackRock, has “unparalleled scale and influence,” according to Morningstar Director Jason Kephart. “It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap.”

So if you want a top ETF of any variety, iShares is a great place to look. And IYW is a great example of this. Its portfolio of 141 companies provides exposure to a range of U.S. technology companies, from computer software to electronics. The majority of these firms are in the software and services or semiconductors sectors.

As is often the case with tech ETFs, don’t let the size of the portfolio fool you. Nearly two-thirds of the fund’s assets are in its top 10 names. Apple, Nvidia and Microsoft account for nearly half. But concentrated bets can pay off, as was the case in 2023 when IYW returned 65.5%. It may be the best-performing tech fund on this list.

IYW gets five stars and a bronze badge from Morningstar.

Global X Artificial Intelligence & Technology ETF (AIQ)

If you’re looking for a more specific approach to tech — namely of the AI variety — AIQ could be for you. The fund invests in companies that could benefit from artificial intelligence or that provide the hardware to facilitate AI’s use. It does this by simply mimicking the Indxx Artificial Intelligence & Big Data Index, which makes this a passive fund. And yet, you’ll be paying active management prices with a 0.68% expense ratio.

AIQ has earned its fees in previous years, with a 55% return in 2023 and 24% return in 2024. However, 2022 hit it hard, when the fund lost over 36%. That said, if you’re bullish on AI, this is one of the best funds for placing your bet. Morningstar gives it four stars and a bronze badge.

As you might expect, the portfolio offers a slightly different mix than other firms on this list with Tesla Inc. (TSLA) and Broadcom Inc. (AVGO) topping the holdings. It’s fairly well spread across its 84 stocks; no company represents more than 4.5% of the overall portfolio and the top 10 account for only 36%.

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7 Best Tech ETFs to Buy in 2025 originally appeared on usnews.com

Update 01/21/25: This story was previously published at an earlier date and has been updated with new information.

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