XLK vs VGT: Two Tech ETFs, Mostly the Same Bet

Disclaimer: This content is not investment advice. Investing involves the risk of loss of principal. Past performance does not guarantee future results. Always consult a qualified financial advisor before making investment decisions.

The Technology Select Sector SPDR Fund and the Vanguard Information Technology ETF are the two default ways to buy U.S. tech in a single ticker. The live XLK vs VGT comparison puts their weighted overlap at 78.95% across 69 shared holdings — a Very High Overlap verdict.

If you hold both because one is "the SPDR one" and the other is "the Vanguard one," you are holding roughly four-fifths of the same portfolio twice.

Where the Overlap Comes From

Both funds are dominated by the same handful of megacaps, held at enormous weights. A single semiconductor name can occupy 15–17% of each portfolio, with a smartphone maker close behind and a software giant around 10%.

Under the weighted formula, only the smaller of the two weights counts toward overlap:

Overlap = Σ min(weight in XLK, weight in VGT)

When a holding sits at 17.3% in one fund and 15.5% in the other, it contributes 15.5 percentage points to the score by itself. Three or four such positions do most of the work. This is overlap driven by concentration, not by breadth — which is why 69 shared names is enough to reach 78.95%.

What Actually Separates Them

The remaining fifth is a real structural difference, even if it is smaller than most investors assume:

• Eligible universe. XLK draws only from S&P 500 constituents. VGT covers the broader U.S. technology market, so it reaches down into mid- and small-cap names that XLK cannot hold.
• Portfolio breadth. That wider net gives VGT a substantially longer holdings list, though the additional names sit at weights small enough that they move the overlap score only modestly.
• Classification drift. Both track a sector definition that has been revised over time — most notably when payment processors were reclassified — and the two indices have not always absorbed those changes identically.
• Concentration caps. Index rules that limit how large individual positions may grow bite differently at each provider, which is why the same company can sit nearly two percentage points apart between the funds.

Should You Hold Both?

Rarely. A Very High Overlap score means the second fund adds a modest tail of smaller technology companies on top of a nearly duplicated megacap core. If that mid-cap tech exposure is what you want, buying it directly is cleaner than paying for the duplicated core twice.

The more important question is what either fund does next to your broad market holdings. U.S. tech is already the largest sector in a cap-weighted index fund, so a dedicated sector position stacks on top of exposure you likely already own. Measure it rather than assume it — VGT vs VOO and XLK vs VTI show how much of the "extra" tech is genuinely extra.

Calibrating the Number

78.95% sits near the top of the scale but not at it. For reference:

Reading a score against that ladder is more useful than reading it in isolation.

How to Check Your Own Sector Sleeve

1. Compare your sector fund against your core holding, not just against its direct rival.
2. Read the weighted score, and check whether the top three shared positions explain most of it — concentration-driven overlap behaves differently from broad overlap.
3. Ask what the non-overlapping portion buys you, and whether you would purchase it on its own.

The methodology guide covers the scoring, and how to reduce ETF portfolio overlap covers the cleanup.

Conclusion

XLK and VGT are 78.95% the same bet, concentrated in the same few megacaps. Choosing between them is reasonable; owning both as diversification is not.

Run the comparison yourself at ETF Overlap Checker — free, no account required.