FTEC vs. IYW: Is the Better Tech ETF Buy Also the Cheaper One?

^GSPC The MSCI Information Technology Index ETF (NYSEMKT:FTEC) provides significantly cheaper access to the broad technology sector than the iShares U.S. Technology ETF (NYSEMKT:IYW) and produces nearly identical 1-year returns. Both ETFs target the domestic tech landscape, providing heavy exposure to the industry giants driving current market trends. Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield. FTEC is the less expensive option, with an expense ratio of 0.08% compared to IYW’s 0.38%. It also provides a higher payout -- FTEC’s dividend yield stands at 0.33%, three times higher than IYW’s 0.11% yield. Growth of $1,000 over 5 years (total return) The Fidelity MSCI Information Technology Index ETF (NYSEMKT:FTEC) holds 287 securities focused on the technology sector. Its largest positions include Nvidia (NASDAQ:NVDA) at 16.7%, Apple (NASDAQ:AAPL) at 14.5%, and Microsoft (NASDAQ:MSFT) at 9.4%. This fund was launched in 2013. By contrast, the iShares U.S. Technology ETF (NYSEMKT:IYW) maintains a leaner portfolio of 139 holdings. Its largest positions include Nvidia at 14.8%, Apple at 13.5%, and Alphabet (NASDAQ:GOOGL) at 12.1%. IYW was launched in 2000. For more guidance on ETF investing, check out the full guide at this link. For everyday investors trying to decide between two similar tech ETFs, cost is often the deciding factor -- and here, FTEC wins by a wide margin. The 0.30 percentage-point expense ratio gap between FTEC and IYW may seem small, but over time that can compound meaningfully. Assuming identical returns, an investor would keep significantly more money in their pocket with FTEC over a 10- or 20-year holding period simply by paying less in annual fees. That said, both funds tell a similar story about where the tech sector stands today: heavily concentrated in a handful of mega-cap names. Nvidia, Apple, and Microsoft together represent more than 40% of FTEC s portfolio and a similarly dominant share of IYW s -- a reminder that investing in either fund means placing a large bet on a small number of companies continuing to lead the market. Where the two funds differ most is breadth. FTEC s 287 holdings offer wider diversification across the tech landscape than IYW s 139, which could matter during periods of market rotation or when smaller tech names outperform the mega-caps. For long-term, cost-conscious investors who want broad exposure to the technology sector, FTEC s combination of lower fees, a higher dividend yield, and broader diversification makes it the more compelling choice. IYW s longer track record, dating back to 2000, may appeal to some investors, but history alone rarely justifies paying nearly five times more in annual expenses for comparable performance. Before you buy stock in Fidelity Covington Trust - Fidelity Msci Information Technology Index ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fidelity Covington Trust - Fidelity Msci Information Technology Index ETF wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $442,220!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,230,114!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don t miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. *Stock Advisor returns as of June 11, 2026. Andy Gould has positions in Alphabet, Apple, and Nvidia and has the following options: long January 2027 $125 calls on Nvidia and short January 2027 $125 puts on Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. FTEC vs. IYW: Is the Better Tech ETF Buy Also the Cheaper One? was originally published by The Motley Fool

FTEC vs. IYW: Is the Better Tech ETF Buy Also the Cheaper One?

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