Best Technology Funds UK for 2024

Investing in the stock market can be daunting, as there are many different financial products available, and lots of different sources of information. But starting small and learning new things piece by piece over time allows the inexperienced investor to grow into a seasoned expert. This article covers one such piece: what exactly is a technology fund? 

As well as providing an answer to this question, this article provides a list of the six best technology funds UK to watch. Each of these funds is discussed in more detail, and the benefits and downsides of investing in technology funds UK are also discussed.

What are Technology Funds UK?

Let’s take a scenario: After performing their due diligence, some investors conclude that in their view it is not just a particular company that will do well, but an entire sector of the economy. As an example, the rise of AI (artificial intelligence) in recent years can mean transformative growth for all kinds of companies in the technology sector, among others. 

Identifying and investing in hundreds of different companies in the technology sector can be a challenge for any investor – beginner or professional. This is where Exchange-Traded Funds (ETFs) become interesting. An ETF is, in simple words, just a bundle of stocks grouped together in one investment. 

This article provides a list of some of the top technology funds UK to keep on watch. These are ETFs that track certain indexes that follow the technology sector in the US stock market, such as the technology companies in the S&P 500 or Nasdaq 100 indexes.

Whilst the funds on this list are issued by US asset managers and track mostly US companies, they are accessible to UK-based investors, as these ETFs are traded on common stock exchanges such as the New York Stock Exchange which can be accessed through UK brokers such as Admirals. 

Best Technology Funds UK to Watch

With the basics about ETFs out of the way, it is time to move on to six of the best technology funds UK to watch. Each ETF is described in more detail further down in this article. Of course, what is considered to be the ‘best’ is subjective. Everyone has different investment objectives and no one can predict the future.

However, the list below can serve as a good starting point to research technology ETFs in more detail and keep track of them. It may be more prudent to invest using a demo account first so you can practice in a virtual environment.

Here are the top 6 best technology funds UK to watch this year: 

1. iShares US Technology ETF CFD
2. Vanguard Information Technology ETF CFD 
3. Fidelity MSCI Information Technology ETF CFD
4. First Trust NASDAQ 100 Technology Index Fund ETF CFD 
5. Technology Select Sector SPDR Fund ETF CFD
6. Invesco S&P 500 Equal Weight Technology ETF CFD

With Admirals, you can trade these ETFs via CFDs (contracts for difference). This product allows you to trade long and short to potentially profit from rising and falling markets. Learn more in the How to Trade CFDs article. 

iShares US Technology ETF - Track the Top US Technology Companies

BlackRock, the world’s largest asset manager with nearly $9 trillion dollars in assets under management, issues the iShares ETFs. The iShares US Technology ETF was founded in 2000 and tracks the Russell 1000 Technology Index. This is an index that contains the top 1000 US-based companies that are involved in the electronics and computer industries. The index is capitalization-weighted, meaning that the allocation of capital within the fund is weighted according to the market capitalization of each included company.

The top 10 companies included in the iShares US Technology ETF are Apple, Microsoft, NVIDIA, Alphabet Inc Class A and Class B (Google), META (Facebook), Broadcom, Salesforce, Adobe, and Advanced Micro Devices. These names will be familiar to the average consumer worldwide, as social media giants like Google and Facebook have a presence that is hard to miss these days. 

The aim of the iShares US Technology ETF is to track the companies comprising the US technology sector, most of which are based in the famous Silicon Valley in California. While there have been concerns raised about some of these companies’ practices, such as the extensive data collection or ethical aspects around the production of consumer electronics in Chinese factories, there is no doubt that the US-based technology sector is the world leader in terms of innovation and size. 

Vanguard Information Technology ETF - Technology Exposure With Low Costs

Similar to BlackRock, Vanguard is a giant within the investment industry, with nearly $8 trillion in assets under management. Its founder, John C. Bogle, has been credited with the creation of the first index fund available to individual investors. ‘Bogleheads’ are members of a nascent movement of investors who prefer to invest in highly diversified, low-cost funds in a set-it-and-forget-it manner.

Vanguard’s Information Technology ETF has been around since 2004, and features a low expense ratio of just 0.10%. The fund includes familiar tech giants like Apple, Microsoft and NVIDIA, as well as payment providers like Visa and Mastercard. Besides these big names, many medium and small-cap companies are included.

This fund tracks the performance of the MSCI US Investable Market Information Technology Index. MSCI is a well-established American finance company that creates and manages indexes such as these. This index tracks a collection of companies of all sizes that, among other things, provide internet services and infrastructure, provide information technology services and consulting, produce technology hardware, produce computers and electronics, and produce semiconductors. 

Fidelity MSCI Information Technology ETF - Representative Sampling ETF of the US Technology Sector

Hailing from Boston, Massachusetts, Fidelity Investments is an American multinational financial services company that manages a wide array of different ETFs with a total of $4.3 trillion in assets under management. It is no surprise that one of their funds has ended up on this list of the best technology funds UK.

Their MSCI Information Technology ETF tracks the performance of the MSCI USA IMI Information Technology Index. This ETF, unlike many of the other funds on this list, is not weighted according to market capitalization, but rather according to representative sampling. This is a weighting method that attempts to match the investment profile of the ETF to that of the underlying index. That includes data on market capitalization, fundamental characteristics (like return variability and yield), and liquidity measures. 

The fund has a relatively low expense ratio of 0.08%, and its portfolio consists mostly of familiar US technology behemoths such as Apple, Microsoft, NVIDIA, Accenture, Broadcom, Salesforce, and payment providers like Visa and Mastercard. The fund was created near the end of 2013, and has gone up five times in value since its inception but struggled in the global stock market crash from 2022 when higher interest rates sent tech stocks tumbling lower.

First Trust NASDAQ 100 Technology Index Fund ETF - Well-Known But Volatile Index Tracker

The Nasdaq 100 is a familiar term to lots of investors. It is a stock market index of the top 100 stocks by market capitalization listed on the Nasdaq stock exchange, excluding financial companies, which are in a separate index.

For many investors, the Nasdaq 100 is synonymous with higher risk for the potential of higher reward investing as the index often features returns greater than those of broader indexes such as the Dow Jones or the S&P 500. But while the returns can be substantial, so too can the downturns, as the index lost 78% of its value when the Dotcom bubble popped in 2000.

First Trust’s Nasdaq 100 Technology Index Fund ETF focuses on the technology companies that are traded on the Nasdaq stock exchange, such as NVIDIA, Datadog, Meta, ZScaler, and Marvell Technology. 92% of the index consists of US-based companies, with the remaining 5% and 3% in the Eurozone and Asia, respectively. 

The fund was established in 2006 and currently comprises around $1.5 billion in assets. The fund is passively managed, though it has a relatively high expense ratio of 0.57%. Technology funds are notoriously volatile as are technology stocks. However, it can provide a more diversified way to invest in technology stocks.

Technology Select Sector SPDR Fund ETF - Established Index ETF Issuer 

SPDR funds (pronounced “spider”) are well-known in the investment industry. For a long time, the SPDR S&P 500 ETF was the largest ETF in the world. These funds are managed by State Street Global Advisors (SSGA), an investment manager that operates in the US, Europe, Mexico, and Asia, with total assets under its management of around $4.5 trillion.

The Technology Select Sector SPDR Fund ETF was established in 1998 and tracks a selection of companies from the S&P 500 index, namely technology companies that are involved in technology hardware, data storage, software production, communications infrastructure, and semiconductors and equipment. 

The passively-managed fund has been around since 1998, meaning it lived through the Dotcom bubble, a black swan market event in which this ETF lost nearly 75% of its value. 

All the usual US technology giants are present, with the top 10 holdings being Microsoft, Apple, NVIDIA, Broadcom, Salesforce, Cisco, Adobe, Accenture, AMD, and Oracle. 40% of this fund’s allocation is within the software industry, 25% is in semiconductors, and roughly another quarter is in technology hardware and storage. 

Invesco S&P 500 Equal Weight Technology ETF - Giving the Same Weighting for Every Tech Company

The name ‘PowerShares’ might ring a bell with investors who have been in the game for a while. After they merged with Guggenheim ETFs back in 2018, all their ETFs were rebranded as ‘Invesco’ ETFs.

“Equal-Weight” means just what it says: the stocks included in this ETF are all allocated the same weight, no matter the company’s market capitalization. This means that a trillion-dollar company like Apple is represented with the same slice of the pie as a smaller capitalization company that might be valued at just several billion dollars.

This weighting strategy might seem counterintuitive but the aim of it is to try and keep the fund more insulated against sharp downturns than a market capitalization-weighted fund. That is because market capitalization-weighted funds tend to be very top-heavy, as the largest companies are allocated the majority of the fund’s capital. When one of these large companies sees a sharp decline in their share price, the fund is consequently heavily impacted as well. 

The top holdings of Invesco’s S&P 500 Equal Weight Technology ETF are NVIDIA (2.4%), AMD (2.0%), Microsoft (1.89%), Adobe (1.85%), and Broadcom (1.85%). The other holdings similarly account for roughly 2% of the fund’s capital allocation each. These allocations are rebalanced quarterly. 

How to Trade Technology Funds UK

With Admirals, you can trade US and UK stocks and ETFs via CFDs with the following commissions:

• US stocks – From $0.02 per share, 1 USD minimum commission. 
• UK stocks – 0.1% of trade value, 1 GBP minimum commission. 

When trading CFDs there are also overnight fees to take into consideration. You can learn more about the fees of individual instruments on the Admirals Contract Specification page.

You can search for global stock and ETF CFDs from the Trade.MT5 web platform and invest in four steps: 

1. Open an account with Admirals.
2. Click on Trade on one of your live or demo trading accounts to open the web platform.
3. Search for your symbol at the top of the search window.
4. Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.

Why Invest in the Best Technology Funds UK? 

With the list of six technology funds to keep an eye on out of the way, one might wonder why to invest in the best technology funds UK. What makes ETFs a powerful tool for any investment portfolio is the benefit of systematic diversification. Buying an ETF that focuses on the technology sector, like the ones discussed above, means an investor will gain exposure to many different companies in this sector at the same time, just by buying one share.

This diversification is important because the value of a portfolio consisting of just a few different companies can decline sharply should one of them go under. However, in nearly all cases the performance of the companies within a given market sector correlates strongly.

There are options for those on the fence about whether investing in the best technology funds in the UK is right for them, namely using a demo trading account. This is a virtual portfolio that allows an investor to buy and sell stocks and ETFs without actually putting up real money. 

It is a good way to practice your investing skills and understand more of the other requirements to invest successfully such as emotional balance and risk management.

FAQs on Technology Funds UK

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