VGT vs PSI: What's the Better Buy?
Two popular tech-focused exchange-traded funds (ETFs) are drawing attention from investors looking to capitalise on the artificial intelligence boom. The Vanguard Information Technology ETF (VGT) and the Invesco Semiconductors ETF (PSI) both offer exposure to the sector but take very different approaches. While one spreads risk across hundreds of companies, the other concentrates on a small group of chipmakers.
VGT holds 322 tech stocks, covering nearly a dozen subsectors from semiconductors to software, hardware, and IT services. This broad diversification helps reduce risk during market downturns but can also lower overall returns when some holdings underperform. Over the past decade, the fund has delivered an average annual return of 22.18%.
PSI, by contrast, focuses solely on semiconductors, with just 30 companies in its portfolio. Its top holdings—Nvidia, Broadcom, and Intel—have remained among the largest for years, followed by Texas Instruments, Qualcomm, and ASML. This narrow concentration raises risk but has also led to stronger gains, with an average annual return of 24.98% over the same period.
Choosing between the two funds depends on an investor’s risk tolerance and long-term strategy. VGT provides stability through wide diversification, while PSI offers higher growth potential from its specialised semiconductor focus. Both remain tied to the AI-driven tech sector, though their structures lead to different performance outcomes.
