Comparison of VGT and XLK in AI-Focused US Tech Funds
State Street's XLK fund and Vanguard's VGT fund offer different portfolio strategies while tracking the US technology sector and artificial intelligence growth.
The State Street Technology Select Sector SPDR ETF and the Vanguard Information Technology ETF are among the primary funds for those looking to invest in the US technology sector and the artificial intelligence boom. However, the two funds differ in their portfolio concentration and index construction methodologies.
Fund Asset Sizes and Expense Ratios
With an asset size of $160.2 billion, the Vanguard fund hosts a larger volume than the State Street fund, which has $119.3 billion in assets.
When examining expense ratios, the State Street fund has a slight advantage with an expense ratio of 0.08%, while Vanguard's expense ratio stands at 0.09%.
Return Performance and Index Structure
The State Street fund delivered a stronger one-year return performance of 43.4%, thanks to its focus on mega-cap technology companies within the S&P 500.
Meanwhile, the Vanguard fund delivered a one-year return of 39.8%, providing a broader spread into the domestic technology index with a total of 310 holdings.
Diversification and Risk Level
The Vanguard fund offers broader diversification among small-, mid-, and large-cap companies, while its maximum drawdown rate is also slightly higher.
Both investment funds provide investors targeting innovation-driven growth with the opportunity to participate in the US technology market.