You are looking for comprehensive exposure to U.S. Technology stocks. You want the Big Tech giants but also the emerging innovators. Two funds often appear in search results: **IYW (iShares U.S. Technology ETF)** and **FTEC (Fidelity MSCI Information Technology Index ETF)**.
While they aim for the same basket of stocks, one fund charges nearly **six times** the fee of the other. For passive investors, this is not a choice—it’s a mandatory switch. This manual will explain why FTEC is the only sensible choice.
📋 Copy Alt Text: Bar chart comparing the expense ratio difference: IYW (0.42%) vs FTEC (0.08%).
The Index: Why Holdings Overlap
Both IYW and FTEC track indices that cover the broad U.S. Technology sector. This means their top holdings are nearly identical, focused on Apple, Microsoft, and Nvidia. Their performance is, therefore, indistinguishable.
The Problematic Sector Shift
Note that both funds exclude **Communication Services** stocks like Google and Meta, which are often mistaken for Tech. For a fund that includes those, you must look at the Communication Services Sector.
The Critical Difference: The Fee Trap
This is the only fact that matters here.
1. IYW (iShares) - The Legacy Product
IYW charges a staggering **0.42%** expense ratio. This high fee erodes returns over decades, especially since its performance mirrors cheaper funds.
2. FTEC (Fidelity) - The Low-Cost Champion
FTEC charges a competitive **0.08%** expense ratio. This aligns it with other low-cost market leaders like VGT.
Comparison Matrix (IYW vs FTEC)
Costs should guide your hand.
| Feature | IYW (iShares) | FTEC (Fidelity) |
|---|---|---|
| Expense Ratio | 0.42% (High Fee Trap) | 0.08% (Winner) |
| Number of Holdings | ~300 | ~300 |
| Issuer | iShares | Fidelity |
| Verdict | Avoid for Long-Term | Best Low-Cost Choice |
The Verdict: FTEC is Mandatory
Action: Sell IYW, Buy FTEC
If you currently own IYW in a taxable account, consider selling it and replacing it with FTEC or VTSAX/VOO. The cost savings are too significant to ignore over decades.
Conclusion: Control Your Costs
Technology sector exposure is essential for growth, but costs must be competitive. **FTEC** provides the same exposure as IYW while allowing you to keep nearly five times the money in your pocket. Choose FTEC.
