VGT tracks the MSCI US IMI Information Technology 25/50 Index, which covers US technology companies of all sizes: software, semiconductors, hardware and IT services. Apple, Microsoft and NVIDIA make up a large share of the fund, so results depend heavily on a small number of mega-cap companies. Compared with XLK, VGT includes small and mid-cap technology firms, and the two funds have performed similarly. Technology valuations are sensitive to interest rates and to expectations for AI and cloud spending.
