Invest in the Broad Information Technology Sector with This Fund

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.
[networked computers]

Technology stocks have been one of the hottest trends out there for a great number of years.

Investors in this sector have seen almost consistent, outsized returns for roughly the last 20 years. It is no wonder that the world of exchange-traded funds (ETFs) has come together to present investors with such a wide array of ways to invest in the sector. Fidelity MSCI Information Technology Index ETF (FTEC) is one contender in this expansive universe.

The index tracked by this fund is designed to capture the large-, mid- and small-cap segments of U.S. information technology stocks. Large-cap stocks are the most strongly represented, and the fund is fully invested in domestic companies.

Although there are some rules about diversification, in practice, the fund has a strong concentration in a few stocks, mainly Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), which together make up more than 35% of the fund’s portfolio. Over the course of the last year, the fund has performed characteristically well.

It is up 35%, slightly ahead of both the NASDAQ and the S&P 500. Its year-to-date results similarly have slightly outperformed those market indicators. The fund has a low expense ratio of 0.08% and more than $6 billion in assets under management. The fund also is quite liquid and easy to trade.

Chart courtesy of www.StockCharts.com

Top holdings for this fund include Apple Inc. (NASDAQ: AAPL), 20.16%; Microsoft Corp. (NASDAQ: MSFT), 16.87%; NVIDIA Corp. (NASDAQ: NVDA), 4.46%; Visa Inc. (NYSE: V), 2.98%; and PayPal Holdings (NASDAQ: PYPL), 2.53%. The top 10 holdings account for 57.5% of the fund’s assets.

For investors looking for a way to invest in the information technology sector without paying high expense ratios, Fidelity MSCI Information Technology Index ETF (FTEC) may belong on your list of funds to research.

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