Fidelity MSCI Information Technology Index ETF

FTEC

Market cap $16.4B

OpenAI's partnership spree with AMD, Oracle & NVIDIA fuels AI boom -- ETFs like IYW, FTEC, FDN, AIQ & XT stand to gain.

Fidelity MSCI Information Technology Index ETF is rated a Buy for long-term, capital appreciation-focused investors seeking technology sector exposure. FTEC outperforms the S&P 500 and NASDAQ over 5- and 10-year periods, with an ultra-low 0.08% expense ratio and strong momentum ratings. Top holdings include industry leaders like Nvidia, Apple, Microsoft, Palantir, and Broadcom, positioning FTEC to benefit from ongoing AI-driven innovation.

The Fidelity MSCI Information Technology Index ETF is heavily concentrated in top AI-driven tech stocks, raising concerns about overvaluation and risk of correction. Despite strong recent earnings from NVDA, MSFT, and AAPL, FTEC appears overbought, with technical indicators suggesting a potential 10-20% drop after recent peaks. Long-term prospects for AI remain, but current market volatility and inflated expectations make it prudent to wait for a correction before investing in FTEC or similar tech ETFs.

Midyear can be an ideal opportunity for investors to re-evaluate their portfolios and consider rebalancing to align with their ideal asset allocation. As the midpoint of 2025 passes, the U.S. stock market has delivered a mixed bag of performance across sectors, driven largely by continued enthusiasm for artificial intelligence (AI) and fluctuating economic conditions.

Looking for broad exposure to the Technology - Broad segment of the equity market? You should consider the Fidelity MSCI Information Technology Index ETF (FTEC), a passively managed exchange traded fund launched on October 21, 2013.

For many investors, building a diversified portfolio is one of the first steps in investing. Fidelity Investments' extensive range of ETFs offers a powerful toolkit to achieve this.

FTEC has outperformed the S&P 500 with a 10-year annual return of 21.1%, making it a great choice for a long-term core tech holding in your portfolio. The ETF is well-diversified, heavily weighted in software and semiconductors, but excludes Google, Amazon, and TSMC—ideal for those already holding these stocks. FTEC's portfolio features leading AI and tech innovators like NVIDIA, Broadcom, Oracle, and Palantir, capitalizing on generational AI growth trends.

FTEC suffers from high concentration, backward-looking market cap weighting, and misses key tech names like Amazon, Meta, and Alphabet. Lower AUM leads to liquidity issues, making FTEC less attractive compared to larger peers like VGT, despite its slightly lower fees. DIY tech portfolios or more diversified ETFs like QQQ offer better risk-reward and flexibility than FTEC's rigid, concentrated approach.

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