VGT vs FTEC: Tech ETF Comparison for Growth Investors

VGT and FTEC both track the same core MSCI index but differ dramatically in scale and exposure breadth. VGT commands roughly $110 billion in assets, making it nearly seven times larger than FTEC's $16.4 billion according to etfdb.com. This size translates into substantially greater diversification: VGT holds 316 individual holdings compared to FTEC's 290. While both funds show similar top-10 stock concentration levels (VGT at 59.9%, FTEC at 59.4%), VGT's larger base inherently dilutes the impact of any single position more effectively.

The cost advantage slightly favors FTEC, though the difference is marginal. FTEC charges a 0.08% expense ratio, compared to VGT's 0.09% in 2025 according to etfdb.com. Liquidity, however, strongly favors the larger fund. VGT averages 538,000 shares traded daily, nearly double FTEC's 291,000-share volume, indicating easier entry and exit for investors and tighter bid-ask spreads.

This structural divergence creates distinct investment profiles. VGT's scale offers broader market exposure and lower relative cost, but its sheer size can sometimes limit its ability to outperform the index aggressively. FTEC, while cheaper and offering similar sector exposure, operates with significantly less capital, potentially making it more responsive to specific stock picks within the index but inherently more volatile. Its lower liquidity could pose challenges during sharp market moves. Investors seeking pure beta exposure with maximum diversification and liquidity gravitate towards VGT, while those willing to accept higher volatility for a slightly cheaper cost basis and potentially more nimble tracking might consider FTEC.

Performance & Volatility Mechanics

Vanguard's Information Technology ETF (VGT) and First Trust NASDAQ-100 Equal Weight Technology Sector Index Fund (FTEC) delivered nearly identical long-term performance, yet their volatility profiles tell a different story. From 2013 through 2023, both funds generated returns over double the S&P 500's (VOO) performance, with 2023 alone seeing VGT surge 52.66% versus FTEC's 53.30% according to totalrealreturns.com. Their drawdowns during the severe 2022 market correction were also remarkably similar, falling roughly 35% at their worst. However, deeper volatility analysis reveals a significant divergence that impacts investor experience.

Standard deviation starkly highlights the difference: VGT's long-term volatility sits at 74.14%, dramatically higher than FTEC's 22.16% according to etfdb.com. This means VGT's annual returns fluctuated far more wildly. Short-term momentum, measured over just five days, underscores this again: VGT's 5-day volatility reached 207.99% versus FTEC's 171.74%. While VGT's 20-day volatility (24.67%) was marginally higher than FTEC's (24.40%), the sheer scale of VGT's standard deviation indicates substantially greater cumulative risk over time.

The implications for growth investors are clear. FTEC offers a dramatically smoother ride for the same core tech exposure, likely due to its equal-weighting strategy reducing concentration risk compared to VGT's market-cap weighted approach. This translates to less painful drawdowns and far lower overall risk for investors seeking tech growth, albeit with a slightly higher expense ratio of 0.08% versus VGT's 0.09%. The massive difference in assets under management – $16.4 billion for FTEC versus $110 billion for VGT – further emphasizes the trade-off between lower risk and lower scale. For investors prioritizing volatility control without sacrificing tech growth potential, FTEC presents a compelling alternative to the higher-volatility Vanguard giant.

Concentration Risk & Liquidity Architecture

The structural differences between VGT and FTEC become starkly apparent when assessing concentration risk and liquidity. FTEC operates with a non-diversified mandate, dedicating at least 80% of its assets to U.S. information technology securities. This focused approach inherently amplifies exposure to sector-specific shocks. Its portfolio holds $16.4 billion, concentrated similarly to VGT's in its top holdings (top 10 at 59.4% versus VGT's 59.9%). Both funds target the broad MSCI USA IMI Information Technology 25/50 Index, encompassing software, services, hardware, and semiconductors across all market caps.

VGT's significantly larger size – $110.0 billion in assets versus FTEC's $16.4 billion – provides tangible liquidity advantages. Its average daily trading volume is 538,000 shares, more than double FTEC's 291,000 shares. This liquidity gap is critical during market stress, potentially making FTEC harder to trade quickly without impacting price. While both ETFs delivered nearly identical long-term returns from 2013-2025 and experienced comparable worst-case drawdowns around 35% during the 2022 downturn, VGT's scale offers a buffer against liquidity crunches that FTEC lacks.

The concentrated structure of FTEC means its performance is tightly coupled to the health of the tech sector itself. A sharp downturn in semiconductors or software services could disproportionately impact FTEC compared to a more diversified basket. VGT's larger, more liquid profile provides investors better protection against forced selling during volatility spikes. For portfolio managers prioritizing stress tolerance, FTEC's high concentration and thinner trading liquidity represent a material risk factor that must be carefully weighed against its tracking precision.

Allocation Strategy & Catalyst Assessment

Our growth positioning hinges on comparing FTEC's cost efficiency and concentration advantage against VGT's liquidity and diversification benefits. While both ETFs track similar tech sectors, their structural differences create distinct risk profiles and catalysts for investors.

FTEC's non-diversified structure concentrates exposure in technology securities, amplifying sector-specific volatility according to finance.yahoo.com. This concentration makes its performance more sensitive to top holdings movements, creating both upside potential and sharper downside risk during tech sell-offs. VGT's broader diversification reduces single-stock impact but dilutes returns when large-cap tech outperforms. Both funds show nearly identical volatility metrics, with FTEC at 1.32 beta and VGT at 1.33 relative to the S&P 500 according to fool.com.

Three key catalysts differentiate these vehicles. First, FTEC's top-5 holdings concentration creates performance volatility that could accelerate during sector-specific rotations. When the largest positions drive returns, their individual movements disproportionately impact the ETF. Second, sector rotation scenarios favor FTEC's large-cap focus according to etf.com. Its underlying index emphasizes big-cap technology stocks, which historically outperform during rate-cut cycles and innovation booms, though this advantage requires sustained capital flow into mega-cap tech.

Liquidity becomes critical at scale. VGT's higher trading volume (538K shares daily vs FTEC's 291K) according to etfdb.com provides a significant advantage for large institutional orders. Below $50 million trade sizes, FTEC remains efficient, but larger positions face wider bid-ask spreads. The $16-130 billion AUM gap creates a liquidity premium that favors VGT for institutional allocation, though FTEC's lower expense ratio (0.08% vs 0.09%) partially compensates for active managers executing smaller trades.

One meaningful downside for FTEC is its vulnerability to concentration risk. When the top holdings underperform, the ETF experiences amplified drawdowns compared to diversified peers. Conversely, VGT faces tracking error risk if its broader exposure dilutes the impact of mega-cap tech leaders. Both funds remain sound growth vehicles, but their optimal use cases differ: FTEC for concentrated tech exposure with cost efficiency, VGT for diversified access with liquidity safety nets.