Looking to grab Google (GOOG) - Get Report, Microsoft (MSFT) - Get Report and other top tech names for your portfolio? Top ETFs such as S&P North American Technology Sector Index Fund (IGM) - Get Report (IGM) - Get Report, Technology Select Sector SPDR (KLK) , PowerShares QQQ (QQQQ) and iShares Dow Jones US Technology (IYW) - Get Report offer investors liquid, transparent exposure to top tech names and significant holdings in Google and Microsoft.
IYW tracks the largest public companies in the technology sector of the U.S. market. Since IYW is capitalization-weighted, it is designed to give you exposure to the biggest names in tech. Microsoft is currently the largest holding in IYW, comprising a whopping 11.20% of the fund. Google also rounds out IYW's top five with a 6.45% stake in the search engine giant. The top two heaviest weighted sectors in IYW are hardware with 59.2% and software with 26.52%. Year to date, IYW is up 27%, beating the
by nearly 22%.
IGM tracks a different underlying index, but also has high concentrations of Google and Microsoft in its portfolio. While
is currently the top holding for IGM, with a 7.63% share of underlying assets, Microsoft and Google also make the top 10 holdings with 6.60% and 5.78% allocations, respectively. Hardware, at 57.22%, is the heaviest weighted sector in this portfolio as well. Software is the second largest sector with a 20.66% slice of the ETF. IGM has nearly identical year-to-date returns as IYW, up 28%.
While QQQQ is not a technology-specific ETF, it tracks a tech-heavy index -- the
. QQQQ is comprised of the largest domestic and international non-financial companies listed on the Nasdaq, which means that tech investors will miss out on some NYSE listed tech firms when choosing this ETF. More than 62% of QQQQ is allocated to technology, and Google and Microsoft are the number 3 and 4 top components, with 5.01% and 4.72% stakes, respectively. QQQQ has returned slightly less than tech-exclusive IGM and IYW year to date -- 24.44% -- but could be a comforting alternative for tech-hungry investors seeking slightly more diversification.
Microsoft is the top holding in
XLK, comprising 9.5% of this plain-vanilla tech ETF. XLK is a capitalization-weighted fund that invests in the largest technology and telecommunications stocks in the S&P 500. Google is the number 6 holding in XLK's underlying basket, comprising 4.99% of the portfolio. XLK's 0.22% expense ratio is just slightly higher than QQQQ's 0.20% ratio and lower than IYW's 0.48% and IGM's 0.48%. Year to date, XLK has returned 22.05%.
At the time of publication, Dion had no positions in the stocks mentioned.
Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.
Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.