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Best Tech ETFs for 2025: How to Build a Growth-Oriented Portfolio

Best Tech ETFs for 2025: How to Build a Growth-Oriented Portfolio

Technology remains one of the most influential engines of growth in modern markets. For investors who want broad exposure without picking individual winners, the best tech ETFs offer an efficient route to participate in software, semiconductors, cloud computing, cybersecurity, and other digital megatrends. This guide explains what to look for in the best tech ETFs, reviews several popular options, and shares practical ideas for building a balanced, growth-oriented allocation that can adapt as technology shifts.

What makes the best tech ETFs stand out?

When evaluating tech exchange-traded funds (ETFs), several factors matter more than others. The best tech ETFs typically combine a reasonable expense ratio with solid liquidity, a well-constructed index, and a roster of high-quality holdings. Here are the core criteria to keep in mind:

  • Small differences in fees matter over time. A lower expense ratio helps your long-term returns, especially if the ETF largely tracks a broad tech index rather than chasing niche topics.
  • Higher daily trading volume and tighter bid-ask spreads reduce execution costs and make it easier to enter or exit a position when market conditions change.
  • Some funds aim to cover the entire U.S. tech universe, while others focus on semiconductors, cybersecurity, or software. The degree of diversification affects risk and return characteristics.
  • Look beyond the ticker to understand the top contributors. Do the fund’s top holdings reflect durable tech leadership (for example, cloud, AI, or essential platforms) or are they concentrated in a few hypes?
  • Efficient tracking to the index means the ETF’s performance closely mirrors the underlying benchmark, with minimal drag from management decisions or taxes.

For many investors, the best tech ETFs strike a balance between broad exposure and targeted bets. A well-chosen mix can capture the upside of industry leaders while providing ballast through diversified names and sub-themes.

Top picks among the best tech ETFs

Below is a practical round-up of widely used tech ETFs, categorized by focus. This is not financial advice, but a strategic starting point for comparison. If you seek broad exposure to U.S. technology, or you want to zero in on semiconductors or cybersecurity, these options are commonly regarded as strong contenders in the realm of the best tech ETFs.

Broad U.S. technology exposure

  • Vanguard Information Technology ETF (VGT) — This is one of the largest, most liquid tech-focused funds. It tracks a broad index of U.S. information technology stocks, offering exposure to giants like software, hardware, and services. The blend tends to be resilient during secular growth in cloud computing and digital platforms. Expense ratio around 0.10% keeps it cost-effective for long-term investors.
  • Technology Select Sector SPDR Fund (XLK) — A classic sector ETF that concentrates on the technology sector within the S&P 500. It tends to have high liquidity and a familiar set of top holdings, often including the dominant platform stocks and hardware names. Expense ratio around 0.10% is in line with other broad tech funds.
  • iShares U.S. Technology ETF (IYW) — A broad, US-focused tech ETF with a slightly different index construction than VGT or XLK. It offers diversification across software, semiconductors, and IT services, with an expense ratio typically around 0.43%.
  • Fidelity MSCI Information Tech ETF (FTEC) — A cost-efficient option that tracks a broad MSCI information technology index. It blends large-cap leadership with mid-cap exposure, giving a balanced tilt within the sector. Expense ratio around 0.08% makes it one of the cheaper broad-tech choices.

Pure-play on software, platforms, and AI-adjacent themes

  • iShares Expanded Tech Sector ETF (IGV) — A slightly more concentrated approach than broader tech funds, IGV emphasizes software and services, with meaningful weight to growth-oriented names. It’s popular among investors who want a tech tilt without venturing into non-tech areas.
  • Invesco QQQ Trust (QQQ) — While not a pure technology fund, QQQ tracks the Nasdaq-100 and has historically leaned heavily into technology giants. It’s widely used for its liquidity and the performance profile of top tech names. Expense ratio around 0.20% makes it a cost-efficient option among broad equity exposures.

Semiconductors and hardware

  • VanEck Semiconductor ETF (SMH) — Focused on the semiconductor supply chain, SMH includes firms involved in chips design, fabrication, and equipment. It tends to be more volatile than broad tech funds but offers targeted exposure to a critical tech sub-sector. Expense ratio around 0.35%.
  • iShares Semiconductor ETF (SOXX) — A similar theme to SMH, SOXX provides exposure to leading semiconductor makers. It’s known for liquidity and a quality roster of fundamental chipmakers, with an expense ratio near 0.46%.

Cybersecurity and AI-focused niches

  • Global X Cybersecurity ETF (BUG) — Targets cybersecurity companies, a growth area within tech given rising digital risks across enterprises. This niche ETF tends to carry a higher expense ratio as it covers a specific theme, typically around 0.60%–0.70%.
  • Global X Robotics & Artificial Intelligence ETF (BOTZ) — Focuses on robotics and AI-enabled automation, providing exposure to topics that could benefit from ongoing productivity gains. While it may have higher volatility, it offers a distinct growth angle within tech. Expense ratios are generally higher relative to broad tech funds.

How to choose among the best tech ETFs

With multiple compelling options, how should an investor choose among the best tech ETFs? Start with your time horizon, risk tolerance, and what you want to achieve with a tech allocation. Here are practical steps to narrow the field:

  1. Do you want broad tech exposure to reflect the sector’s growth, or do you prefer targeted bets on semiconductors, software, or cybersecurity? Your answer will guide whether you select broad funds like VGT or XLK, or more focused options like SMH or BUG.
  2. Compare expense ratios and average daily trading volumes. A much lower fee can compound over years, while liquidity affects your ability to rebalance during market stress.
  3. Some funds are heavily weighted toward a handful of mega-cap stocks; others spread risk more evenly. Decide which approach aligns with your risk tolerance.
  4. If you have a particular conviction about cloud computing, AI, or cybersecurity, a thematic ETF can complement a broad tech holding. But thematic ETFs can be more volatile and may require longer holding periods to realize their benefits.
  5. Look at how closely the ETF tracks its index over time and how it has performed in different market cycles. While past performance is not a guarantee of future results, it helps compare consistency across funds.

How to build a balanced tech ETF portfolio

For a thoughtful allocation, consider layering exposure to achieve both stability and growth potential. A practical approach could look like this:

  • Start with a broad tech ETF such as VGT or XLK to establish a core position in the sector. This will typically capture broad software, services, and hardware trends.
  • Strategic satellites: Add one or two more specialized funds, such as SMH or SOXX for semiconductors, or IGV for a slightly different software/hardware balance. The goal is to avoid over-concentration while maintaining growth opportunities.
  • Theme tweaks: If you are confident about cybersecurity or AI-enabled tech, consider a thematic ETF like BUG or BOTZ to augment the core exposure. Keep the allocation to theme-focused funds modest to manage risk.
  • Tech stocks can swing widely. Revisit your allocations at least annually, and adjust as market conditions or your goals change. Tax considerations and overall portfolio diversification should guide rebalancing, not just performance chasing.
  • ETFs are typically tax-efficient, but be mindful of capital gains and your account type (taxable vs. retirement accounts) when implementing a tech-heavy strategy.

Potential risks and considerations

Any tech-focused allocation carries certain risks. The sector’s strength depends on macro cycles, semiconductor demand, regulatory developments, and the pace of innovation. Concentration in a few megacap names can amplify volatility, while thematic funds may experience sharper shifts if investor sentiment changes or if an expensive hype fades. Diversification within tech helps smooth the ride, but it cannot eliminate risk. A disciplined approach to position sizing and ongoing review can help you stay aligned with long-term objectives.

Conclusion: finding the best tech ETFs for your portfolio

The best tech ETFs for most investors combine cost-effectiveness, broad exposure, and a well-considered balance between core holdings and targeted themes. By starting with broad funds such as VGT or XLK and then selectively adding sector-focused options like SMH, IGV, or BUG, you can construct a portfolio that captures the growth of technology while keeping volatility in check. Remember to align choices with your time horizon, risk tolerance, and financial goals. The right mix of the best tech ETFs can be a meaningful pillar of a modern, growth-oriented investment strategy.