‘It’s going to be a huge field’: Warren Buffett was once asked which sector he’d choose to be an expert in if he lived another 50 years — here are some of the industry’s top ETFs

Invesco QQQ

Invesco QQQ is an ETF that tracks the Nasdaq 100. In eight out of the last ten years, Invesco QQQ has outperformed the S&P 500.

This fund is tech heavy but not tech exclusive. It’s designed to track the 100 largest companies on the Nasdaq exchange, which means there’s some variation in sectors. As of 2024, 61.48% of the fund’s assets are dedicated to the technology sector, while 17.51% are deployed in consumer discretionary stocks and 6.10% in healthcare.

Even so, for investors trying to apply a passive investment approach with a tech focus, Invesco QQQ is a great replacement for the S&P 500. The fund has a relatively low expense ratio of 0.20%, which makes it a good fit for a low-cost, long-term, passive investing strategy.

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iShares U.S. Technology ETF

BlackRock’s iShares U.S. Technology ETF (IYW) focuses exclusively on American tech companies. This fund has a slightly higher expense ratio of 0.40% but has had better performance than Invesco QQQ. Over the past ten years, it has delivered a compounded annual return rate of 20.97% — compared to Invesco QQQ’s 18.67%.

The fund’s portfolio includes 140 holdings, but nearly 90% of the assets are dedicated to software and services, semiconductors and semiconductor equipment and technology hardware and equipment. For investors seeking a hyper-focused tech basket, this fund is an ideal target.

Vanguard Information Technology ETF

The Vanguard Information Technology ETF (VGT) is more diversified than BlackRock’s IYW and cheaper than Invesco’s QQQ.

The fund’s expense ratio is just 0.10%, which makes it the cheapest option on this list. Meanwhile, the underlying portfolio is more diversified. Semiconductors account for 29.1% of the overall portfolio while systems software accounts for 21.3%. Altogether, VGT has 318 holdings in this portfolio.

Performance is also comparable to other tech funds. Over the past ten years, VGT has delivered a compound annual growth rate of 20.63%.

Overall, this fund is a relatively balanced and conservative approach to adding tech exposure to your portfolio.

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