Comparing Two Major Tech ETFs: State Street vs. Vanguard
The State Street Technology Select Sector SPDR ETF (XLK +1.00%) offers an intensive, cost-effective option for tech exposure, while the Vanguard Information Technology ETF (VGT +0.83%) provides broader market coverage.
Both of these funds are pivotal for investors looking to tap into aggressive growth within the information technology sphere. The State Street ETF is concentrated on large-cap tech stocks found in the S&P 500, while the Vanguard ETF includes a wider array of stocks, encompassing smaller companies too. This difference in focus affects aspects like diversification and dividend income.
Snapshots (Cost and Size)
| Metric | XLK | VGT |
|---|---|---|
| Publisher | SPDR | Vanguard |
| Expense Ratio | 0.08% | 0.09% |
| 1 Year Return (as of May 11, 2026) | 54.8% | 50.8% |
| Dividend Yield | 0.5% | 0.4% |
| Assets Under Management | $114.7 billion | $121.3 billion |
Note: Beta measures the price volatility compared to the S&P 500, based on five years of monthly returns.
The State Street Fund is slightly more cost-effective, with an expense ratio of 0.08%, although the Vanguard has a larger asset base of $121.3 billion.
Performance and Risk Comparison
| Metric | XLK | VGT |
|---|---|---|
| Maximum Drawdown (5 Years) | (33.6%) | (35.1%) |
| $1,000 Growth in 5 Years (Total Return) | $2,815 | $2,673 |
What’s Inside
The Vanguard Fund includes 310 holdings, with a heavy tilt toward technology (98%), and slight allocations to industrials and other assets (1% each). Major players include Nvidia at 18.47%, Apple at 15.80%, and Microsoft at 10.17%. Established in 2004, it has a trailing 12-month dividend of $2.41 per share.
Conversely, the State Street Fund is more focused, housing only 73 holdings, mainly large-cap S&P 500 stocks. Its top positions are NVIDIA at 15.42%, Apple at 12.37%, and Microsoft at 9.98%. While it targets a narrower index, this emphasis has led to a stronger five-year growth profile.
What This Means for Investors
For those eager to invest in the booming tech sector, especially with the advancements in artificial intelligence, both XLK and VGT are appealing choices. Which one is more suitable really comes down to individual investment goals.
XLK has outperformed in several areas—higher one-year returns, lower maximum drawdowns, and a better dividend yield—along with a more favorable expense ratio. All these factors paint it as the more advantageous option compared to VGT.
Yet, it’s worth noting that XLK is limited to just 73 stocks. Yes, these are leading firms, but the fund’s success is largely tied to the performance of giants like Nvidia.
On the other hand, VGT’s broader portfolio of over 300 tech companies allows for greater diversification and includes smaller firms that might see faster price gains as they expand.
There’s also the recent stock price dip for VGT following an 8-for-1 split in April. This ETF might especially attract those looking to connect with a range of technology businesses, particularly smaller enterprises riding the wave of AI growth.
