Key takeaways
- Expense gap: Fidelity MSCI Information Technology Index ETF (FTEC) charges 0.08% annually versus 0.38% for iShares U.S. Technology ETF (IYW), a 0.30 percentage point difference.
- Recent performance: Both funds delivered similar trailing returns over the past year, with IYW at 49.61% and FTEC at 49.82% (as of June 12, 2026).
- Dividends: FTEC’s trailing dividend yield is 0.33% compared with 0.11% for IYW.
- Diversification trade-off: FTEC holds nearly 300 stocks, while IYW is more concentrated with 139 holdings—potentially changing how each reacts when specific large names move.
Investors comparing two of the best-known tech sector exchange-traded funds—iShares U.S. Technology ETF (IYW) and Fidelity MSCI Information Technology Index ETF (FTEC)—are likely to find the biggest differences in cost structure and portfolio breadth rather than headline performance. Data shows both funds delivered nearly the same one-year total returns, but FTEC’s substantially lower fee and deeper holdings may influence long-term outcomes.
Over the past year, IYW returned 49.61% and FTEC returned 49.82% as of June 12, 2026, while their expense ratios diverged sharply: 0.38% for IYW versus 0.08% for FTEC. With beta near similar levels—1.43 for IYW and 1.41 for FTEC—investors should focus on how diversification and fees could shape returns over multiple market cycles.
Cost and income: where the funds separate
FTEC is positioned as the lower-cost option. Its 0.08% expense ratio is 0.30 percentage points below IYW’s 0.38%. Over time, that fee differential can matter because it is deducted from assets continuously, reducing the drag on compounding returns.
Income profiles also differ. FTEC’s trailing dividend yield is 0.33%, while IYW’s is 0.11%. Although both yields are relatively low compared with many broad dividend-oriented ETFs, the gap suggests FTEC is capturing more of the index’s cash distributions relative to its pricing.
Performance and downside characteristics
On recent returns, the funds look extremely similar. The one-year total return ending June 12, 2026 was 49.61% for IYW and 49.82% for FTEC.
Downside history shows a modest difference in drawdowns over a five-year window, where IYW’s maximum drawdown is reported at (39.44%) and FTEC’s at (34.95%). While neither figure eliminates the risk associated with the tech sector, the higher drawdown figure for IYW suggests investors could see slightly larger peaks-to-trough declines during market stress, consistent with its more concentrated structure.
The funds’ growth of a hypothetical $1,000 investment over five years is also close: $2,559 for IYW versus $2,441 for FTEC (total return). Even with FTEC’s lower fee, IYW’s higher five-year cumulative figure indicates that—depending on the period—concentration can help if top holdings outperform.
Portfolio depth and top holdings
FTEC, launched in 2013, tracks a broad technology index and holds nearly 300 companies. The concentration in the largest names remains meaningful, but the overall portfolio is more diversified across the sector.
Its biggest positions include Nvidia at 16.7%, Apple at 14.5%, and Microsoft at 9.4%.
IYW launched in 2000 and runs a more concentrated approach with 139 holdings, targeting American companies associated with technology industry drivers. The fund’s top exposure overlaps with major peers in the tech market.
Its largest positions include Nvidia at 14.8%, Apple at 13.5%, and the combined share classes of Alphabet at 12.1%. The difference in the third-largest holding—Microsoft for FTEC versus Alphabet for IYW—could influence performance during periods when leadership rotates within mega-cap tech.
What investors should watch next
For investors allocating to U.S. tech via ETFs, the key watch items are likely to be recurring: expense drag versus concentration effects. If a portfolio’s total returns are driven by a handful of mega-cap leaders, IYW’s narrower construction may amplify outcomes relative to FTEC. Conversely, if leadership broadens across mid- and large-cap technology names, FTEC’s deeper bench and lower fee may support more consistent long-run results.
Heading forward, investors may also want to monitor how mega-cap valuations and guidance cycles affect index constituents, since both funds remain heavily weighted to the same core names. In addition, upcoming sector-relevant reporting and broader macro influences—particularly interest-rate expectations—could shape the tech trade, with these ETFs reflecting the sector’s sensitivity to discount rates.
