Technology exchange-traded funds (ETFs) available in Canada provide investors with a diversified way to gain exposure to the technology sector. These funds bundle stocks from companies involved in software, hardware, semiconductors, and related industries into a single security that trades on an exchange. For Canadian investors, these ETFs offer access to both domestic tech leaders like Shopify and Constellation Software as well as global giants such as Apple and Nvidia. Understanding the different strategies, geographic focuses, and costs associated with these funds is essential for incorporating them into a portfolio.
What Defines a Technology ETF
A technology ETF is a fund that holds a portfolio of stocks from specific industry groups within the technology sector. These groups typically include software and services, technology hardware and equipment, and semiconductors. The shares of an ETF trade throughout the day on a stock exchange under a unique ticker symbol, just like an individual stock. When an investor buys shares of a technology ETF, they gain exposure to the collective performance of all the underlying technology stocks held within the fund's portfolio. The selection process for these holdings is determined by the ETF's stated investment strategy, which can be passive, active, or follow a rules-based smart beta approach. Many technology ETFs also have a specific geographic focus, concentrating on U.S. stocks, Canadian stocks, or taking a global approach to capture innovation from around the world.
All ETFs charge investors an annual management expense ratio, commonly referred to as the MER. This fee covers the fund's operating costs, including management and administrative expenses, and is deducted directly from the fund's assets. For example, an investor who places $10,000 into a technology ETF with a 0.25 percent MER would pay approximately $25 in fees over the course of a year. The MER is a critical factor for investors to consider as it directly impacts net returns. Technology stocks are generally considered to have a higher risk and reward profile compared to some other market sectors, which can lead to increased volatility in the value of technology ETFs. This characteristic makes understanding a fund's composition and strategy particularly important for potential investors.
Popular Technology ETF Strategies and Structures
Canadian technology ETFs employ various strategies to build their portfolios, each with distinct objectives. Passive or index ETFs aim to replicate the performance of a specific benchmark index, such as the Nasdaq-100 or the S&P/TSX Capped Information Technology Index. These funds offer transparent, rules-based exposure at a typically lower cost. Actively managed ETFs, in contrast, rely on a portfolio management team to select stocks with the goal of outperforming a benchmark. This approach can be advantageous in a rapidly evolving field like technology, where today's leaders may be overtaken by new innovators. A third category, often called smart beta, uses alternative index construction rules to target specific factors like quality or momentum.
Another key structural difference is geographic focus. Some ETFs concentrate exclusively on Canadian technology stocks, providing targeted exposure to the domestic market. Others focus heavily on U.S. technology companies, which represent the largest global market. Global technology ETFs offer the broadest geographic diversification by holding stocks from multiple developed markets, including the United States, Europe, and Japan. Currency exposure is another consideration for funds holding foreign assets. Some ETFs are currency-hedged, using derivative instruments to minimize the impact of exchange rate fluctuations between the Canadian dollar and foreign currencies on the portfolio's value. This feature is designed to reduce volatility for CAD-based investors.
Examples of Canadian Technology ETFs
Several technology ETFs trade on the Toronto Stock Exchange and rank among the most popular in terms of assets under management. The BMO NASDAQ 100 Equity Hedged to CAD Index ETF, known by its ticker ZQQ, is a longstanding option that tracks the Nasdaq-100 index. While not a pure technology sector fund, over 50 percent of its portfolio was allocated to major U.S. technology companies like Apple, Microsoft, Nvidia, and Meta as of 2025. Its strategy includes hedging the U.S. dollar exposure back to the Canadian dollar, which aims to reduce volatility related to currency swings for Canadian investors.
The TD Global Technology Leaders Index ETF, ticker TEC, takes a global pure-play approach by tracking the Solactive Global Technology Leaders Index. This ETF holds a market-cap weighted portfolio of large and mid-cap technology stocks from around the world, with approximately 84 percent of its holdings in U.S. companies. Its top holdings include firms like Apple, Microsoft, Alphabet, and Taiwan Semiconductor. For investors seeking exposure specifically to the Canadian technology sector, the iShares S&P/TSX Capped Information Technology Index ETF (XIT) is a primary option. XIT tracks the performance of the S&P/TSX Capped Information Technology Index, which held 27 Canadian technology stocks in 2025. Its portfolio is highly concentrated, with Constellation Software and Shopify each accounting for roughly 25 percent of the fund's total holdings at that time.
- BMO NASDAQ 100 Equity Hedged to CAD Index ETF (ZQQ): Tracks Nasdaq-100, currency-hedged, heavy U.S. tech allocation.
- TD Global Technology Leaders Index ETF (TEC): Tracks global tech leaders index, ~84% U.S. exposure.
- iShares S&P/TSX Capped Information Tech ETF (XIT): Tracks Canadian tech index, ~27 holdings, top-heavy concentration.
- TD Global Technology Leaders CAD Hedged ETF (TECX): Currency-hedged version of TEC using derivatives.
- TD Global Technology Innovators Index ETF (TECI): Targets companies in early to middle growth stages.
- CI Global Artificial Intelligence Fund ETF (CIAI): Actively managed fund focused on AI theme.
Thematic ETFs represent a more focused strategy within the technology sector. The CI Global Artificial Intelligence Fund ETF (CIAI) is an example of an actively managed fund targeting the artificial intelligence theme. Launched recently, it aims for long-term capital growth by investing in companies involved in AI research, development, and application. As of late 2025, its portfolio was concentrated, with the top ten holdings accounting for about 73 percent of the fund, and 88.8 percent of its assets were allocated to U.S. stocks. Another thematic example is the Evolve FANGMA Index ETF (TECH), which provides exposure to six specific mega-cap technology companies: Meta Platforms, Amazon, Netflix, Google, Microsoft, and Apple.
Costs and Fees for Technology ETFs
The management expense ratio is the primary cost investors pay for owning an ETF. This annual fee is expressed as a percentage of the total assets invested in the fund and covers management, administrative, and operating expenses. MERs for technology ETFs in Canada vary based on the fund's strategy and complexity. Generally, passively managed index ETFs have lower MERs, while actively managed or thematically specialized ETFs tend to have higher MERs to cover the increased research and management activity. It is crucial for investors to review the MER, as it directly reduces the net return of the investment.
Some providers use temporary fee waivers to attract initial investment. For instance, the CI Global Artificial Intelligence Fund ETF (CIAI) launched with a management fee waiver that brought its cost down to 0.20 percent until its first anniversary or until it reached $1 billion in assets. Its reported MER was 0.39 percent at the end of 2024. Investors should be aware that such promotional fees may expire, leading to a higher ongoing cost. Beyond the MER, investors also pay standard brokerage commissions when buying or selling ETF shares on an exchange, which further impacts overall returns. The competitive landscape among Canadian ETF providers has led to a general trend of lower fees over time, benefiting investors through reduced cost drag on their portfolios.
Considerations for Canadian Investors
Canadian investors evaluating technology ETFs must consider several factors specific to their situation. The concentration risk of a fund's portfolio is a primary concern. Some ETFs, particularly those focused on the Canadian market, can be highly concentrated in a few large holdings. For example, the iShares S&P/TSX Capped Information Technology Index ETF (XIT) had about 50 percent of its assets in just two stocks in 2025. This top-heavy structure can lead to greater volatility, as the fund's performance is heavily dependent on the fortunes of a small number of companies. In contrast, global technology ETFs typically offer more diversification across dozens or hundreds of holdings and across multiple geographic regions.
Currency risk is another important factor for funds holding international assets. When a Canadian investor buys a fund that holds U.S. or other foreign stocks, the value of those holdings in Canadian dollars will fluctuate with exchange rates. Some ETFs address this through a currency-hedging strategy, which uses financial derivatives to mitigate the impact of currency movements. This can be suitable for investors who want pure exposure to the technology stocks without the added variable of foreign exchange swings. Finally, investors should align their choice of ETF with their overall investment goals and risk tolerance. Technology sector investments are known for their potential high growth but also come with higher volatility compared to more stable sectors like utilities or consumer staples.
The Technology Sector Context and Growth Trends
The technology sector remains a significant driver of global equity market returns. Worldwide information technology spending surpassed US$5 trillion in 2025 and is projected to continue growing at a high-single-digit annual rate through 2027. This growth is propelled by several long-term trends, including the expansion of artificial intelligence, cloud computing, cybersecurity, and enterprise software. Investment in artificial intelligence specifically has been expanding at an annual rate of over 20 percent, becoming a core budget item for large organizations globally. These macro trends form the underlying growth thesis for many technology ETFs.
While the Canadian technology market is smaller than its U.S. counterpart, domestic companies like Shopify, Constellation Software, CGI, and OpenText generate significant global revenue. The performance of these firms has contributed to renewed momentum for Canadian technology ETFs. The sector's growth potential makes it an attractive area for investors seeking to tilt their portfolios toward innovation. However, this potential is coupled with the sector's characteristic volatility. Investors often use technology ETFs as a strategic component within a broader, diversified portfolio rather than as a standalone investment, balancing the pursuit of growth with overall risk management.
Frequently asked questions
What is an MER and why is it important for ETFs?
The MER, or Management Expense Ratio, is the annual fee charged by an ETF to cover its operating costs, including management and administrative expenses. It is expressed as a percentage of the fund's total assets and is deducted directly from the fund's returns. The MER is important because it directly reduces an investor's net return. A lower MER means more of the fund's gross returns are retained by the investor.
What are thematic technology ETFs?
Thematic technology ETFs focus on a specific niche or trend within the broader technology sector. Instead of investing in the entire sector, they target companies involved in a particular theme, such as artificial intelligence, cybersecurity, or cloud computing. An example is the CI Global Artificial Intelligence Fund ETF (CIAI), which is actively managed to invest in firms involved in AI research and application. These ETFs offer targeted exposure but can be more concentrated and volatile.
How are technology ETF portfolios selected?
Technology ETF portfolios are selected based on the fund's stated strategy. Passively managed ETFs automatically hold the stocks that make up a specific benchmark index, like the Nasdaq-100. Actively managed ETFs rely on a portfolio management team to research and select individual stocks with the goal of outperforming a benchmark. Some ETFs use a rules-based "smart beta" approach that selects and weights stocks based on factors like quality or momentum rather than just company size.
What is the difference between a technology ETF and a broad-market ETF?
A technology ETF invests specifically in stocks from the software and services, technology hardware and equipment, and semiconductor industry groups. In contrast, a broad market index ETF holds a diversified portfolio tracking a wide variety of sectors like financials, energy, healthcare, and technology. Technology ETFs provide concentrated, thematic exposure to bet on the sector's potential outperformance, while broad market ETFs aim to capture the steady long term returns of the overall economy. This makes technology ETFs more focused but potentially more volatile than the diversified approach of broad market funds.
What does it mean when a technology ETF is currency-hedged?
A currency hedged technology ETF uses derivative instruments to minimize the effects of foreign exchange swings on the investment portfolio. For Canadian investors, this is designed to reduce the risk that comes from holding assets priced in other currencies, like the US dollar. An example is the TD Global Technology Leaders CAD Hedged Index ETF (TECX), which employs a currency overlay strategy. This hedging aims to ensure the fund's returns in Canadian dollars more closely reflect the performance of the underlying global technology stocks, without the added volatility of currency fluctuations.
Are Canadian technology ETFs only invested in Canadian companies?
No, Canadian technology ETFs are not exclusively invested in Canadian companies. Many have a significant global or US focus. For instance, the TD Global Technology Leaders Index ETF (TEC) holds about 84 percent of its portfolio in US tech stocks, with the remainder in European, Japanese, and Canadian companies. Conversely, the iShares S&P/TSX Capped Information Technology Index ETF (XIT) focuses solely on Canadian technology stocks. This variety allows investors to choose between domestic exposure and access to worldwide technology leaders through funds traded on Canadian exchanges.
Sources and further reading
- Top Canadian Technology ETFs in 2026 fool.ca
- Technology ETFs from TD Asset Management td.com
- This Is My Favourite Technology ETF for Canadian Investors ca.finance.yahoo.com
- Technology Equities ETFs etfdb.com
- 49 Best ETFs in Canada, August 2026 milliondollarjourney.com
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.