Top 3 Technology ETFs

Technology is clearly a long term growth prospect for investors willing to remain invested and should continue to outperform the market over time. Many have viewed the sector with skepticism since the tech bubble burst more than a decade ago, but times have clearly changed for the better. Valuations are now based on stronger fundamentals and careful selection of investments has yielded good long term returns for many funds. Technology ETFs greatly reduce the volatility inherent in this sector through by carefully selecting securities to create widely diversified portfolios.

Below is a list of the top 3 technology ETFs. Remember the best ETFs for each category are the one that have a combination of the lowest cost (expense ratio) and lowest tracking error.

Exchange Traded Fund	Expense ratio
Vanguard Information Technology	0.24%
ishares Dow Jones US Technnology	0.47%
ishares S&P North American Technology	0.48%

Vanguard Information Technology ( VGT - ETF report ) seeks to replicate the performance of the MSCI US Investable Market InformationTechnology 25/50 Index. This ETF has a below average expense ratio for its category of 0.24% compared to .50% for the category. The top holdings of this ETF are Apple, IBM and Microsoft.

ishares Dow Jones US Technology ( IYW - ETF report ) tracks the price performance and yield of the Dow Jones US Technology Index. This ETF has a 0.47% expense ratio and has very low .02% tracking error meaning it is 99.80% correlated to its underlying index.

ishares S&P North American Technology ( IGV - ETF report ) seeks to replicate the S&P North American Technology Index. This ETF has a below average expense ratio of 0.48% and is currently selling at aa 0.05% premium to its NAV. The top holdings in this ETF are Microsoft, Oracle and Salesforce.com.

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