Key Points

Vanguard's Information Technology ETF (VGT) achieves greater diversification with 310 holdings, versus just 73 for State Street's Technology Select Sector SPDR ETF (XLK).
XLK maintains a lower expense ratio of 0.08% and posted a 1-year total return of 54.8%.
XLK edges out with a dividend yield of 0.5%, slightly above VGT's 0.4%.

The State Street Technology Select Sector SPDR ETF (XLK) presents a targeted, economical option for S&P 500 technology stocks, while the Vanguard Information Technology ETF (VGT) extends coverage across a larger swath of the market.

These ETFs stand as essential holdings for those pursuing robust growth in the technology sector. XLK zeroes in on large-cap tech names from the S&P 500, but VGT encompasses a broader U.S. equity landscape, incorporating small- and mid-cap firms. Such variations affect diversification levels and income generation.

Snapshot: Cost and Size

Issuer: XLK - SPDR; VGT - Vanguard
Expense ratio: XLK - 0.08%; VGT - 0.09%
1-year return (as of May 11, 2026): XLK - 54.8%; VGT - 50.8%
Dividend yield: XLK - 0.5%; VGT - 0.4%
Beta: XLK - 1.26; VGT - 1.31
AUM: XLK - $114.7 billion; VGT - $121.3 billion

Beta reflects price volatility against the S&P 500, based on five-year monthly returns. The 1-year return captures total return over the past 12 months. Dividend yield uses trailing-12-month distributions.

XLK proves marginally cheaper at 0.08% expense ratio, though VGT commands larger assets under management totaling $121.3 billion.

Performance and Risk Comparison

Max drawdown (5 years): XLK - (33.6%); VGT - (35.1%)
Growth of $1,000 over 5 years (total return): XLK - $2,815; VGT - $2,673

What's Inside

VGT functions as a comprehensive market fund with 310 holdings, allocating 98% to technology, 1% to industrials, and 1% to other sectors. Top weights feature Nvidia at 18.47%, Apple at 15.80%, and Microsoft at 10.17%. Introduced in 2004, it distributed $2.41 per share over the trailing 12 months, benefiting from diverse market caps in electronics and computing.

XLK, by comparison, concentrates on 73 holdings since its 1998 inception, emphasizing S&P 500 large caps. Its leaders are Nvidia at 15.42%, Apple at 12.37%, and Microsoft at 9.98%, comprising 99% technology. It yielded $0.76 per share in the past 12 months. Despite a tighter focus, its emphasis on premier large caps drives superior five-year growth.

What This Means for Investors

As artificial intelligence propels the technology sector, both XLK and VGT attract investors eyeing substantial gains. The ideal choice hinges on personal objectives.

XLK shines with superior one-year returns, reduced maximum drawdown, better dividend yield, and lower costs. These attributes position it ahead of VGT in several key areas.

Yet XLK's 73 holdings mean heavy reliance on giants like Nvidia, tying performance closely to their fortunes.

Still, XLK efficiently captures leading tech firms. It suits those without direct stakes in these names.

VGT's expansive portfolio exceeding 300 companies fosters diversification, including smaller tech outfits absent from XLK. These firms hold potential for explosive growth amid expansion.

Additionally, VGT's share price dropped following an 8-for-1 split in April, appealing to those targeting broad tech exposure, especially surging small- and mid-caps fueled by AI.