VGT vs PSI: What's the Better Buy?

Core Insights - Both the Vanguard Information Technology ETF and the Invesco Semiconductors ETF are focused on the tech sector, particularly linked to the artificial intelligence industry, but they employ different investment strategies [2] Group 1: Investment Strategies - The Vanguard Information Technology ETF (VGT) offers a diversified portfolio with 322 tech stocks across various subsectors, including semiconductors, software, hardware, infrastructure, and manufacturing services [4] - The Invesco Semiconductor ETF (PSI) is less diversified, containing only 30 semiconductor stocks, which increases its risk but may lead to higher total returns due to its targeted approach [6] Group 2: Performance Metrics - Over the last 10 years, the Vanguard Information Technology ETF has achieved an average annual return of 22.18%, while the Invesco Semiconductor ETF has outperformed with a 24.98% average annual return [8] Group 3: Risk and Return Considerations - The diversification in the Vanguard ETF can help limit risk during market volatility, but it may also dilute returns from lower-performing stocks [5] - The Invesco ETF's narrow focus on semiconductor stocks increases its risk but can potentially lead to greater earnings [6]