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Top 10 Technology ETFs

Stocks in this article: XLK VGT IYW QTEC FDN IGV IGN

VGT (Vanguard Information Technology ETF) follows the MSCI US Investable Market Information Technology 25/50 Index. The index consists of small to large companies in the broad technology space including various sectors and subsectors. The fund was launched January 2004. The expense ratio is .24%. AUM equal $1.7 billion with average daily trading volume 215K shares. As of mid-September 2011 the annual dividend is $.36 making the current yield .96% and YTD return -3.43%.

Data as of September 2011

VGT Top Ten Holdings & Weightings

  1. Apple, Inc. (AAPL): 11.51%
  2. International Business Machines Corp (IBM): 7.79%
  3. Microsoft Corporation (MSFT): 7.32%
  4. Oracle Corporation (ORCL): 4.95%
  5. Google, Inc. (GOOG): 4.73%
  6. Intel Corp (INTC): 4.53%
  7. Qualcomm, Inc. (QCOM): 3.47%
  8. Cisco Systems Inc (CSCO): 3.21%
  9. Hewlett-Packard Co (HPQ): 2.95%
  10. EMC Corporation (EMC): 2.12%

IYW (iShares Dow Jones U.S. Technology ETF) follows the index of the same name. The fund was launched May 2000. The expense ratio is .48%. AUM equal $1.3 billion and average daily trading volume is 256K shares. As of mid-September 2011 the annual dividend yield is 1.43% YTD return -3.95%.

Alternative choices with similar characteristics include MTK (SPDR MS Technology ETF) which follows the Morgan Stanley Technology Index. The expense ratio is .50%.  IGM (iShares S&P/GSTI Technology ETF) follows the index of the same name. The expense ratio is .48%. Both ETFs have achieved similar rates of return with similar holdings. 

Data as of September 2011

IYW Top Ten Holdings & Weightings

  1. Apple, Inc. (AAPL): 16.92%
  2. International Business Machines Corp (IBM): 10.05%
  3. Microsoft Corporation (MSFT): 9.53%
  4. Google, Inc. (GOOG): 6.44%
  5. Intel Corp (INTC): 5.30%
  6. Oracle Corporation (ORCL): 5.08%
  7. Cisco Systems Inc (CSCO): 4.17%
  8. Qualcomm, Inc. (QCOM): 4.06%
  9. Hewlett-Packard Co (HPQ): 2.71%
  10. EMC Corporation (EMC): 2.23%

QTEC (First Trust NASDAQ 100 Technology ETF) follows the NASDAQ 100 Technology Sector Index is an equally weighted index. The fund was launched in April 2006. The expense ratio is .60%. AUM equal $158 million while average daily trading volume is 422K shares. As of mid-September 2011 the annual dividend is $16 making the current yield .34% and YTD return -11%. 

Most investors believe the logical alternative to QTEC is QQQ (PowerShares NASDAQ 100 ETF). It follows the NASDAQ 100 Index which includes the largest 100 nonfinancial companies listed on the NASDAQ. But it's not a pure technology play with nearly 30% of constituents in other sectors.

Data as of September 2011

QTEC Top Ten Holdings & Weightings

  1. Baidu, Inc. ADR (BIDU): 3.22%
  2. Google, Inc. (GOOG): 3.01%
  3. Apple, Inc. (AAPL): 2.94%
  4. Broadcom Corporation (BRCM): 2.83%
  5. Cerner Corporation (CERN): 2.74%
  6. Microsoft Corporation (MSFT): 2.73%
  7. Marvell Technology Group, Ltd. (MRVL): 2.71%
  8. Check Point Software Technologies, Ltd. (CHKP): 2.67%
  9. Cisco Systems Inc (CSCO): 2.58%
  10. Intel Corp (INTC): 2.54%

FDN (First Trust Internet ETF) follows the Dow Jones Internet Index which demands a constituent company must have 50% of its revenues from the internet. It was launched in June 2006. The expense ratio is .60%. AUM equal $465M and average daily trading volume is 300K shares. In our opinion this ETF provides the greatest exposure to companies in this important sector. As of mid-September 2011 the annual dividend was $.08 making the yield around .12% and YTD return -9.32%.

An alternative selection might include IAH (ML Internet Architecture) and HHH (ML Internet Holders). Both holders are trusts but should convert to ETFs if Van Eck gains shareholder approval to manage these and no doubt change some of the weightings which are too heavy in some stocks and contain few issues. This is due to the trust structure not permitting new issues added to their holdings.

Data as of September 2011

FDN Top Ten Holdings & Weightings

  1. Google, Inc. (GOOG): 11.52%
  2. Amazon.com Inc (AMZN): 8.99%
  3. eBay Inc (EBAY): 6.34%
  4. Priceline.com, Inc. (PCLN): 5.51%
  5. Salesforce.com, Inc. (CRM): 4.49%
  6. Yahoo, Inc. (YHOO): 3.93%
  7. Netflix, Inc. (NFLX): 3.81%
  8. Check Point Software Technologies, Ltd. (CHKP): 3.57%
  9. Juniper Networks, Inc. (JNP

IGV (iShares Software ETF) tracks the S&P North American Technology Software Index. The fund was launched in July 2001. The expense ratio is .48%. AUM equal $511 million and average daily trading volume is roughly 147K shares. As of mid-September 2011 the dividend is only .07% and YTD return -8%.

Alternative choices include SWH (ML Software HOLDR) and PSJ (PowerShares Dynamic Software ETF). The latter tracks the Dynamic Software Intellidex Index an enhanced index which seeks to more actively manage the constituents via quantitative methodologies.

Data as of September 2011

IGV Top Ten Holdings & Weightings

  1. Microsoft Corporation (MSFT): 10.54%
  2. Oracle Corporation (ORCL): 8.42%
  3. Salesforce.com, Inc. (CRM): 6.75%
  4. Symantec Corp (SYMC): 5.64%
  5. Adobe Systems Inc (ADBE): 5.54%
  6. Citrix Systems, Inc. (CTXS): 4.94%
  7. Intuit, Inc. (INTU): 4.88%
  8. CA, Inc. (CA): 3.53%
  9. Red Hat, Inc. (RHT): 3.38%
  10. Electronic Arts, Inc. (ERTS): 3.32%

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