The Fidelity MSCI Information Technology ETF is one of the cheaper broad-based tech ETFs on the market but it hasn’t enjoyed the same popularity as pricier rivals offered by State Street and Vanguard.
For a management fee of 8 basis points, FTEC offers broad exposure to more than 300 tech firms, dominated by giants like Apple, Microsoft and Intel. Like rivals including State Street’s popular Technology Select Sector SPDR Fund (XLK) and the Vanguard Information Technology ETF (VGT), FTEC also owns sizable slugs of Visa and Mastercard.
Launched in 2013, FTEC has amassed less than $3 billion in assets while its pricier rivals XLK and VGT manage more than $500 billion apiece. The divergence is even more surprising given FTEC’s cheaper price tag: XLK charges 13 basis points and VGT charges 10 basis points.
The lack of popularity isn’t due to any particular defect of FTEC; rather, it’s largely due to a dearth of marketing by Fidelity, which has a long-standing arrangement with BlackRock’s iShares funds, which are offered commission free on Fidelity’s platform. FTEC might appeal most to existing Fidelity brokerage customers who want a commission-free fund that offers broad and inexpensive exposure to the technology sector.
Investors should note that that FTEC, like XLK and VGT, doesn’t invest in popular stocks often thought of as technology firms, including Facebook, Twitter and Google-parent Alphabet Inc. This is due to a global shift in index taxonomy reclassified those firms as “communications services.” And for sophisticated traders, XLK is still the preferred tool because of its size, liquidity and active options market.