FTEC: A Low-Cost, High-Growth Bet on the Future of Tech

The artificial intelligence (AI) revolution is reshaping industries, and investors seeking exposure to this transformative force must balance cost efficiency with strategic alignment to the most influential players. The Fidelity MSCI Information Technology Index ETF (FTEC) offers a compelling solution: a low-cost vehicle with concentrated exposure to dominant AI-driven technology leaders. With an expense ratio of just 0.08%-among the lowest in its category-FTEC provides access to a portfolio weighted toward semiconductors and software giants that are central to the AI ecosystem. For investors aiming to capitalize on the next phase of technological innovation, FTEC's combination of affordability, performance, and sector focus makes it a standout choice.

Cost Efficiency: A Competitive Edge

FTEC's 0.08% expense ratio positions it as one of the most cost-effective options for investors seeking broad technology exposure. This low cost structure is particularly advantageous in a sector where active management often fails to outperform index-based strategies. By tracking the MSCI USA IMI Information Technology 25/50 Index, FTEC avoids the premium fees associated with actively managed funds while maintaining alignment with the largest and most influential technology companies. For long-term investors, this fee advantage compounds meaningfully over time, enhancing net returns without sacrificing access to high-growth opportunities.

Portfolio Composition: Powering the AI Revolution

FTEC's holdings are heavily concentrated in the information technology sector, with the top 10 companies accounting for 58.28% of its assets. This focus includes semiconductor leaders like NVIDIA and AMD, which together represent approximately 31% of the ETF's portfolio. Semiconductors are the backbone of AI, as they provide the computational power required for machine learning,

data processing, and cloud infrastructure. NVIDIA, for instance, has seen explosive demand for its GPUs in AI applications, while AMD's advancements in chip design position it as a key player in the sector's growth.

Beyond semiconductors, FTEC includes software and hardware companies that are directly leveraging AI in their business models. Microsoft's Azure cloud platform, for example, is a critical infrastructure for AI development, while Apple's integration of AI into its ecosystem underscores the sector's ubiquity. This diversified yet focused approach ensures that FTEC captures both the foundational and applied layers of the AI revolution.

Performance: Outpacing Broader Markets

FTEC's performance in 2025 underscores its appeal as a high-growth vehicle. Over the past year, the ETF delivered a 23.31% return, significantly outperforming the S&P 500 (via SPY), which returned 15.56% in the same period via the same source. This outperformance is not a recent phenomenon: over a 10-year span, FTEC has averaged an annualized return of 22.13%, compared to SPY's 14.72% via the same source. While higher volatility is inherent in technology investing-FTEC's beta of 1.32 reflects its sensitivity to market swings-the ETF's max drawdown of -34.95% in 2025 is notably less severe than SPY's -55.19%, suggesting a more resilient structure during downturns.

Compared to peer ETFs like the Vanguard Information Technology ETF (VGT), FTEC's performance is closely aligned but slightly superior. Both funds recorded 1-year returns of approximately 23% in 2025, but FTEC's 0.08% expense ratio edges out VGT's 0.09% via the same source, offering a marginal cost advantage. While VGT's larger number of holdings 314 vs. FTEC's 289 provides incremental diversification, FTEC's concentration in top-tier AI and semiconductor stocks amplifies its exposure to the sector's most dynamic growth drivers.

Strategic Role in a Long-Term Portfolio

As AI continues to redefine industries-from healthcare to finance-investors must consider how to balance risk and reward. FTEC's low cost, high conviction in AI-linked leaders, and proven outperformance make it a strategic addition to a long-term portfolio. Its focus on large-cap technology companies mitigates the volatility often associated with smaller, speculative tech stocks, while its semiconductor exposure ensures participation in the foundational layer of the AI boom. For investors with a multi-decade horizon, FTEC offers a disciplined, cost-efficient way to ride the wave of technological progress without overpaying for complexity.

Conclusion

The Fidelity MSCI Information Technology Index ETF (FTEC) stands out as a low-cost, high-conviction bet on the future of technology. With a 0.08% expense ratio, a portfolio weighted toward AI and semiconductor leaders, and a track record of outperforming broader indices, FTEC is uniquely positioned to benefit from the AI-driven growth cycle. While its volatility demands a long-term perspective, the ETF's strategic alignment with the most influential players in the tech sector makes it an attractive option for investors seeking to capitalize on the next decade of innovation.