XLK vs VGT: Technology Sector ETFs
Two heavyweight technology ETFs at nearly the same fee. XLK is a concentrated bet on S&P 500 tech giants; VGT casts a wider net across hundreds of tech stocks. The difference is breadth.
Don't have time? Here's what you need to know:
- 1XLK holds only ~65 large-cap S&P 500 tech stocks; VGT owns 300+ including mid- and small-cap tech.
- 2Both are dominated by Apple, Microsoft, and Nvidia and charge similar fees near 0.09-0.10%, so they track closely.
- 3Neither holds Alphabet, Meta, or Amazon, which GICS classifies outside Information Technology.
- 4A tech sector ETF is a concentrated tilt, not a core holding; a broad index fund already owns these same megacaps.
Narrow vs Broad: The Core Difference
XLK (Technology Select Sector SPDR) and VGT (Vanguard Information Technology ETF) both give you concentrated exposure to U.S. technology, and both are dominated by the same megacaps — Apple, Microsoft, and Nvidia sit near the top of each. But they're built on different universes. XLK holds only the technology stocks already inside the S&P 500, which means roughly 65 large-cap names and nothing smaller. VGT tracks a broader MSCI U.S. tech index that reaches down into mid- and small-cap technology, holding 300-plus stocks.
That breadth gap is the whole comparison. XLK is a focused bet on established large-cap tech; VGT owns those same giants plus a long tail of smaller, faster-growing (and more volatile) tech companies. The top-heavy megacaps drive most of the return in both funds, so they track closely — but VGT's wider net gives it a different risk-and-growth profile at the edges.
A Classification Quirk: What Counts as Tech
Both funds follow the GICS sector classification, and that creates a subtle catch worth knowing. Under GICS, several companies most people think of as "tech" — Alphabet (Google), Meta, Amazon, Netflix — are actually classified in Communication Services or Consumer Discretionary, not Information Technology. So neither XLK nor VGT holds them. If you want Google or Meta exposure through a sector fund, a tech ETF won't deliver it.
What you do get is the hardware, software, and semiconductor core: Apple, Microsoft, Nvidia, Broadcom, and the chip and enterprise-software names. Payment processors like Visa and Mastercard have historically landed in the tech sector too. The practical upshot is that a "technology" sector fund is narrower and more specific than the colloquial meaning of tech — understand exactly which giants you're buying and which you're not.
Important: Neither XLK nor VGT holds Alphabet, Meta, Amazon, or Netflix. Under GICS rules those sit in Communication Services or Consumer Discretionary, so a tech sector ETF leaves them out entirely.
Cost, Concentration, and Performance
On fees the two are nearly tied, both in the rough vicinity of 0.09-0.10%. Concentration is where they diverge: XLK's modified-cap-weighting and narrow S&P 500 universe make it extremely top-heavy, with its largest two or three holdings often making up a very large share of the fund. VGT is also top-heavy but spreads weight across far more names, so its biggest positions carry somewhat less dominance and its smaller holdings add diversification.
Historically the two have delivered very similar returns, because the megacaps that dominate both have driven tech's performance. In years when large-cap tech leads, XLK's tighter concentration can edge ahead; when smaller tech stocks rally, VGT's breadth can help. Neither is a diversified portfolio, though — both are single-sector bets that move sharply with the fortunes of a handful of companies.
| XLK | VGT | |
|---|---|---|
| Issuer | State Street (SPDR) | Vanguard |
| Index universe | S&P 500 tech only | MSCI US tech (all-cap) |
| Approx. holdings | ~65 | 300+ |
| Market-cap reach | Large-cap only | Large, mid, and small-cap |
| Expense ratio | ~0.09% | ~0.09-0.10% |
| Concentration | Very top-heavy | Top-heavy but broader |
| Excludes (GICS) | Alphabet, Meta, Amazon | Alphabet, Meta, Amazon |
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Which to Choose, and How Much to Hold
If you want the purest large-cap tech bet and prefer a tighter, more concentrated portfolio of established giants, XLK fits. If you'd rather own the broader technology sector including mid- and small-cap names and a longer list of companies, VGT is the wider net. The fee difference is negligible, so this is really a choice about breadth and concentration, not cost.
Far more important than picking between them is sizing the position. A technology sector fund is a high-conviction tilt, not a core holding — it concentrates your money in one sector that already makes up a huge share of a broad index like VOO or VTI. If you own a total-market fund and add XLK or VGT, you're doubling down on tech you already hold. Keep any single-sector bet to a deliberate slice of the portfolio, not the foundation.
Tip: Before adding XLK or VGT, check how much tech you already own through a broad index fund. A total-market or S&P 500 fund is already heavily weighted to these same megacaps.
Frequently Asked Questions
What is the main difference between XLK and VGT?
Breadth. XLK holds only the technology stocks inside the S&P 500 — about 65 large-cap names — while VGT tracks a broader MSCI index that includes mid- and small-cap tech, holding 300-plus stocks. Both are dominated by the same megacaps (Apple, Microsoft, Nvidia) and charge similar fees, so they track closely, but VGT casts a wider net at the smaller end.
Do XLK and VGT hold Google, Amazon, or Meta?
No. Under the GICS classification both funds follow, Alphabet (Google) and Meta sit in Communication Services and Amazon in Consumer Discretionary, not Information Technology. So neither tech ETF holds them. You get the hardware, software, and semiconductor core like Apple, Microsoft, Nvidia, and Broadcom instead.
Is XLK or VGT more concentrated?
XLK is more concentrated. It draws only from S&P 500 tech and uses a modified cap-weighting, so a small number of megacaps make up a very large share of the fund. VGT is also top-heavy but spreads weight across 300-plus holdings, so its largest positions are somewhat less dominant and its long tail adds a bit of diversification.
Should a tech ETF be a core holding?
No. Both XLK and VGT are single-sector bets that move sharply with a handful of companies, not diversified core holdings. A broad fund like VOO or VTI already carries a large tech weight through these same megacaps, so adding a tech ETF doubles down on what you own. Keep any sector tilt to a deliberate minority slice of your portfolio.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.