3 Terrific Technology ETFs to Buy

The economy and market are fluid. Its various sectors (which are just groups of similar businesses) have fallen in and out of prominence over time.

Just consider this: The energy sector used to be one of the market's largest sectors, making up a high-teens percentage of the S&P 500 before the Great Recession. Today, it sits at less than 3%, and that's after its recent big run on the back of surging oil prices.

Technology stocks are the current king of the hill, and they have been for some time. The sector has been the market's greatest driver of growth for a quarter-century thanks to the internet, e-commerce, cloud computing, AI, and more. These innovations have made technology far more than just the devices in our hands and on our desks—they've turned technology into the backbone of the American economy.

So while sectors come and sectors go, at least for now, no one sees technology's superiority waning anytime soon.

However, while there's a lot to be said about investing in individual technology stocks, tech stock ETFs have their own appeal: diversification. While heaping a large portion of your assets into one or two equities has the potential to disrupt your portfolio should one of those equities collapse, spreading your risk around dozens of stocks inside an ETF ensures that one stock's failure won't crack your nest egg.

Read on as I introduce you to my recently updated list of the market's best tech ETFs.

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The Best Tech ETFs to Buy

What exactly constitutes a great technology-sector fund is going to vary from one person to the next. But we can narrow a very large universe of tech ETFs down to a batch that will appeal to most buy-and-hold investors looking for certain criteria.

I start virtually every review of investment funds by booting up Morningstar Investor and running a quality screen I customize for each article. Here's what I looked for in my search for the best technology funds:

• Morningstar Medalist rating: Morningstar has two ratings systems—the Star ratings and the Medalist ratings. The latter are a forward-looking analytical view of a fund. Per Morningstar: "For actively managed funds, the top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the rated investment vehicle to produce positive alpha relative to its Morningstar Category index over the long term, meaning a period of at least five years. For passive strategies, the same ratings indicate that we expect the fund to deliver alpha relative to its Morningstar Category index that is above the lesser of the category median or zero over the long term." So I'm starting with any ETF that has earned a Morningstar Medalist rating of Bronze or above.
• Low fees: Every basis point in expenses that a fund charges is money that's coming out of performance. While we obviously want fund companies to be compensated for making a good product, we want to own funds that aren't taking an onerous cut of the returns. All funds here are in the second-lowest or lowest quartile of category funds by expenses—as you'll see, more tactical strategies will tend to be more expensive than broader sector strategies.
• Meaningful assets under management: To be included on this list, a tech ETF must have at least $250 million in assets under management (AUM). While I personally love brand-spanking-new funds, established ETFs with high assets are much less likely to close (the number of ETF closures in a given year is typically in the triple digits!), and thus better buys for people who are looking out several years. Higher assets under management also frequently coincide with lower expenses (great for investors generally) and tighter bid/ask spreads (great for swing and day traders).

Out of the more digestible resulting list, I've selected a variety of technology funds that cover a variety of investor wants and needs, from core sector coverage to smart-beta twists to specific technology industries. And because Morningstar's ratings change throughout the year, I frequently update this list to both ensure all of the funds listed here are Medalist-worthy, as well as to highlight funds that have merited inclusion for a while but haven't yet been discussed.

Without further ado, let me introduce you to a few of the picks from my larger article about the best tech ETFs to buy.

Vanguard Information Technology ETF

• Assets under management: $146.6 billion*
• Dividend yield: 0.4%
• Expense ratio: 0.09%, or 90¢ per year on every $1,000 invested
• Morningstar Medalist rating: Bronze

If you just want to buy a broad bundle of tech stocks at a reasonable cost, it's hard to do much better than the Vanguard Information Technology ETF (VGT).

The VGT tracks the MSCI US Investable Market Information Technology 25/50 Index, which includes large-, mid- and small-cap companies within the information technology sector. Its assets are allocated to each stock based on the market capitalization of the company's "float," which is just the company's shares available for public trading. Said more simply: The bigger the company, the greater its weight.

On the one hand, you're getting exposure to nearly 320 companies (most of them growth stocks) spanning a variety of technology-sector industries, including semiconductors; systems software; application software; hardware, storage, and peripherals; electronic components; and more.

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On the other hand, while that sounds pretty diversified, VGT—and many other broad sector funds, which frequently use market cap weighting systems—still poses some concentration risk. For instance, trillion-dollar behemoths Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) account for 18%, 16%, and 10% of the fund's assets, respectively. For a fund that holds hundreds of companies, a lot of the fund's performance (43%!) is reliant on just three names.  This weighting system also skews the exposure to different market-cap sizes. VGT allocates almost 80% of its assets to large caps; mid- and small caps split the rest.

If you really want to lean into the benefits of diversification with much more similar exposure across all stocks, you could consider a fund that equally weights its components, such as the Invesco S&P 500 Equal Weight Technology ETF (RSPT), which I've previously called one of the best ETFs for beginners.

However, Vanguard Information Technology ETF is the market's largest tech stock ETF by assets, and it's not for nothing. In addition to having extremely low annual expenses of just 0.09%, its straightforward methodology has largely worked out for it. Indeed, VGT has beaten the pants off RSPT over every significant time frame. 

Part of the reason? When its larger components struggle (and it's not because of, say, a bear market), it may be because smaller components in the fund are eating their lunch. So as long as all of VGT's holdings have a larger lunch to share, the ETF should benefit.

* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for each fund in this story are for the ETF share class only.

Related: 12 Best Vanguard ETFs You Can Buy [Build a Low-Cost Portfolio]

Defiance Connective Technologies ETF

• Assets under management: $858.7 million
• Dividend yield: 0.5%
• Expense ratio: 0.30%, or $3.00 per year on every $1,000 invested
• Morningstar Medalist rating: Bronze

When we think of sector funds, we typically think of either broad-basket funds like VGT or industry funds such as SOXQ. But there's a third type—one that's usually not as technically pure, but that can still give you what what you're generally looking for.

I’m talking about "thematic" funds.

Related: The 16 Best ETFs to Buy for the Rest of 2026

Consider the Defiance Connective Technologies ETF (UFOX), a space ETF that looks to invest in "the global space economy and next-generation connectivity powering the AI revolution" by investing in two broad categories of companies:

• Satellite communications and space industry: Firms whose products, services or business activity are used in developing or are otherwise instrumental to satcom and the space industry)
• Connective technology stocks: Firms that produce hardware, software, or services related to 5G or 6G networks, or other connective technologies

That all might scream "tech stocks" to you, and that's largely what you get. This roughly 60-stock portfolio includes mainstay technology names like Broadcom (AVGO), Nvidia, and Cisco Systems (CSCO). 

But that's not all you get. Tech accounts for 75% of assets. Another 15% is invested in aerospace and defense firms like Rocket Lab (RKLB) and Planet Labs (LB), while another 7% goes toward the communication services sector. The remaining 3%? Real estate investment trusts (REITs), such as telecommunications infrastructure owner American Tower (AMT) and datacenter property giant Equinix (EQIX).

In other words: UFOX invests a theme that branches out across more than one sector. If you're OK with that, great. If you require pure tech exposure, you might want to consider a true sector or industry fund instead.

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Alger AI Enablers & Adopters ETF

• Assets under management: $501.3 million
• Dividend yield: 1.3%
• Expense ratio: 0.58%*, or $5.80 per year on every $1,000 invested
• Morningstar Medalist rating: Gold

We can also get actively managed thematic exposure, like what the Alger AI Enablers & Adopters ETF (ALAI) has to offer.

Portfolio Manager Patrick Kelly seeks out companies "focusing on the development, adoption, or utilization of artificial intelligence (AI) technologies) identified through our fundamental research as demonstrating promising growth potential."

It's a broad mandate. He can invest in stocks of all sizes and geographies. He's allowed to buy not only traditional common stock, but even preferred stock. And he can even own private placements that you and I otherwise couldn't own. All that really matters is that "AI can play a material role in potentially driving stock price performance over the next 12 to 36 months."

This AI ETF currently owns 65 stocks, many of which are names we associate with artificial intelligence: Nvidia. Amazon (AMZN). Alphabet (GOOGL). But if you've been reading carefully, you'll know that while all three of those sound like tech-sector companies, only Nvidia is.

Related: 5 Best Silver ETFs You Can Own

Indeed, ALAI is considered a technology fund, and technically, a majority of its holdings are in the tech sector … but it's only 55% of assets. Tech-esque communication services are a sizable 15%, and consumer cyclicals are around 10%. It also holds companies from five other sectors, including healthcare and even materials. And it makes sense—the fund's strategy allows for not just companies that enable artificial technology, but also those that merely use it.

Kelly is only taking one really big swing at the moment (Nvidia, 13%), though Microsoft, Taiwan Semiconductor (TSM), and Amazon are all 5%-6% weights.

Alger AI Enablers & Adopters has only been around since 2024, so there are no meaningful performance metrics to use for comparison's sake. But Morningstar gives the fund its highest Medalist rating of Gold, and a fee waiver helps make its expenses plenty competitive with index funds catering to the AI theme. That puts ALAI among some of the best tech ETFs you can own right now.

* 0.67% expense ratio is reduced with a 9-basis-point fee waiver.

Learn More About These and Other Funds With Morningstar Investor

If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

With Morningstar Investor, you'll enjoy a wealth of features, including Morningstar Portfolio X-Ray®, stock and fund watchlists, news and commentary, screeners, and more. And you can try it before you buy it. Right now, Morningstar Investor is offering a free seven-day trial and a discount on your first year's subscription when you use our exclusive link.

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Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.