Should You Invest in the Vanguard or iShares Technology ETF? It Depends on What You Mean by “Technology.”
Publish Date: 2026-06-05 08:20:00
Source Domain: www.fool.com
Comparing iShares U.S. Technology ETF (IYW 0.44%) and Vanguard Information Technology ETF (VGT 0.88%) reveals that while both offer aggressive growth through the tech sector, VGT provides lower costs and broader diversification.
Both funds target the high-growth domestic technology market, but they follow different indexing philosophies. Investors frequently use these instruments to gain concentrated exposure to the silicon and software giants that drive modern markets, though their underlying indexes treat specific megacap stocks differently. While IYW includes certain internet-based communication giants, VGT sticks to a more traditional information technology definition.
Snapshot (cost & size)
| Metric | IYW | VGT |
|---|---|---|
| Issuer | iShares | Vanguard |
| Expense ratio | 0.38% | 0.09% |
| 1-yr return (as of 6/3/26) | 59.5% | 60.2% |
| Dividend yield | 0.12% | 0.32% |
| Beta | 1.43 | 1.42 |
| AUM | $25.5 billion | $144.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Cost-conscious investors may find the Vanguard fund more affordable given its 0.09% expense ratio, which is nearly a quarter of the fee charged by the iShares fund. Additionally, VGT offers a higher trailing payout for those seeking income from their technology holdings.
Performance & risk comparison
| Metric | IYW | VGT |
|---|---|---|
| Max drawdown (5 yr) | (39.4%) | (35.1%) |
| Growth of $1,000 over 5 years (total return) | $2,858 | $2,728 |
What’s inside
The Vanguard Information Technology ETF seeks to mirror a benchmark of stocks within the information technology sector, focusing on companies that serve the computer and electronics industries. It uses a full-replication strategy to track its index, which contains a broad basket of about 310 holdings. This fund, launched in 2004, allocates approximately 98% of its assets to technology stocks. Its largest positions include Nvidia at 18.6%, Apple at 14.8%, and Microsoft at 10.02%. It has…
