Tech ETFs: VGT and IYW in a Duel of Cost and Diversification

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Two mechanical titans of the digital realm, the Vanguard Information Technology ETF (VGT 0.93%) and the iShares US Technology ETF (IYW 0.91%), traverse the same terrain of American technological innovation, each a vessel for those who seek to sail the currents of industry’s leading firms.

Though their charts of market dominion overlap, the disparities in their fiscal burdens, breadth of holdings, and recent tempests may sway investors toward divergent shores.

Snapshot (cost & size)

Metric IYW VGT
Issuer iShares Vanguard
Expense ratio 0.38% 0.09%
1-yr return (as of Dec. 31, 2025) 23.99% 20.12%
Dividend yield 0.14% 0.41%
Beta (5Y monthly) 1.32 1.33
AUM $21 billion $130 billion

VGT, with its frugal fee, offers a more modest price tag, while its dividend yield whispers of quiet sustenance-perhaps a siren song for those who measure wealth in cents rather than percentages.

Performance & risk comparison

Metric IYW VGT
Max drawdown (5 y) -39.44% -35.08%
Growth of $1,000 over 5 years $2,347 $2,133

What’s inside

VGT, a tapestry of 322 stocks, weaves the giants of Nvidia, Apple, and Microsoft into its fabric, alongside smaller artisans of electronics and applied science. Its sector allocation, a singular focus on technology, offers a panoramic view of the industry’s vast expanse.

IYW, more narrowly spun, holds 141 stocks, its top holdings-Nvidia, Apple, Microsoft-less dominant in proportion. Both funds, however, eschew the entanglements of leverage and hedging, their paths uncluttered by such contrivances.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

VGT and IYW, though kindred in purpose, diverge in their nuances. Over the last year and five years, their total returns have danced in near harmony, yet IYW’s slight edge in performance lingers like a shadow. With comparable betas and drawdowns, their volatility has been a mirrored echo.

Yet, the distinction lies in their breadth. VGT’s wider net, nearly 200 stocks more, may appeal to those who find solace in diversity, a safeguard against the caprices of single enterprises. Its lower fees, a quiet revolution, and higher yield, a modest reward, could tilt the scales for the long-sighted investor.

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VGT’s frugality, a boon for those with grander aspirations, ensures that the annual cost of $9 per $10,000 invested contrasts starkly with IYW’s $38. Over decades, this disparity may accumulate into a sum worthy of contemplation. Its dividend, though modest, offers a steady trickle for those who value passive income.

The choice, dear reader, hinges on your horizon. VGT’s frugality and diversification may serve you well in the long march, while IYW’s focused approach might yet outpace it, though the future remains an enigma.

Glossary

ETF: An Exchange-Traded Fund, a financial instrument that trades on stock exchanges, aggregating a portfolio of assets.
Expense ratio: The annual fee, as a percentage of assets, that a fund levies upon its investors.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its share price.
Beta: A measure of a fund’s volatility relative to the broader market, typically the S&P 500.
AUM: Assets under management, the total market value of assets a fund oversees.
Max drawdown: The largest percentage decline from a fund’s peak value to its lowest point over a specified period.
Sector allocation: The distribution of a fund’s investments across industry sectors.
Mega-cap: Companies with exceptionally large market capitalizations, usually exceeding $200 billion.
Passively managed: A fund that mirrors an index rather than striving to outperform it through active selection.
Total return: The investment’s price change plus all dividends and distributions, assuming reinvestment.

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2026-01-01 01:07