XLC vs XLK: The Most Misunderstood Sector Comparison in Tech Investing
Most investors assume XLC and XLK overlap heavily. They do not. Alphabet and Meta are in XLC, not XLK. Apple, Nvidia, and Microsoft are in XLK, not XLC. Understanding which fund holds what changes everything about how to use them.
Different Funds for Different Bets. XLK for Hardware/Software. XLC for Platforms/Media.
XLC (Communication Services Select Sector SPDR Fund) and XLK (Technology Select Sector SPDR Fund) are both heavily weighted toward large technology-adjacent companies, but they track different GICS sectors and hold materially different stocks. XLK holds Apple (~21%), Nvidia (~21%), Microsoft (~17%), Broadcom, and Salesforce — the traditional software and semiconductor names. XLC holds Meta (~22%), Alphabet (~20%), Netflix, T-Mobile, Comcast, and Walt Disney — media, telecom, and online platforms. The key fact almost everyone misses: Alphabet (Google) and Meta (Facebook) are in XLC because GICS classifies them as Communication Services, not Technology. They are not in XLK at all. This means XLK and XLC have very little overlap and serve as complements, not substitutes. Both charge 0.09%. If you want AI and semiconductor exposure, XLK. If you want online advertising, streaming, and platform businesses, XLC.
📋 Quick Takeaways
⚠️Alphabet (Google) and Meta are in XLC, NOT XLK. This surprises most investors and is the most important thing to know about this comparison.
💻XLK holds Apple, Nvidia, and Microsoft. XLC holds Meta, Alphabet, Netflix, and Disney. The overlap is minimal.
💰Both charge 0.09% — the fee is not a differentiator. The choice is purely about which sector exposure you want.
📊 Data-Based Take: XLC has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
✓Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
XLC
Communication Services Select Sector SPDR Fund
Expense Ratio
0.09%
1-Year Return
+31.2%
AUM
$16B
Holdings
24
XLK
Technology Select Sector SPDR Fund
Expense Ratio
0.09%
1-Year Return
+28.6%
AUM
$68B
Holdings
68
📋 XLC vs XLK — Key Facts Side by Side
Metric
XLC
XLK
Fund Name
Communication Services Select Sector SPDR Fund
Technology Select Sector SPDR Fund
Issuer
SPDR
SPDR
Tracks Index
Communication Services Select Sector Index
Technology Select Sector Index
Expense Ratio
0.09%
0.09%
Cost per $10K/yr
$9.00
$9.00
AUM
$16B
$68B
Holdings
24
68
Inception
2018
1998
1-Year Return
+31.20%
+28.60%
3-Year Return
+9.80%
+17.40%
5-Year Return
+12.40%
+21.30%
Avg Bid-Ask Spread
0.01%
0.01%
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 XLC vs XLK — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy XLC or XLK?
Choose if...
XLC
You already use SPDR and prefer staying within their fund family
Choose if...
XLK
You want broader diversification (68 holdings vs 24)
You already use SPDR and prefer staying within their fund family
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❓ XLC vs XLK — Frequently Asked Questions
GICS (Global Industry Classification Standard) classifies Alphabet under Communication Services because its primary revenue driver is online advertising through search and YouTube — a communications and media business model — not hardware or software infrastructure. Similarly, Meta generates revenue through social media advertising. Both were reclassified from Technology to Communication Services in 2018 when GICS created the Communication Services sector. XLK tracks Technology sector companies as defined by GICS; XLC tracks Communication Services sector companies. This is why both Alphabet and Meta sit in XLC.
If you hold VOO or VTI, you already have exposure to both sectors at their market-cap weights. Adding XLC and XLK on top of a broad index overweights both sectors. The case for holding sector ETFs is to intentionally tilt your portfolio toward a specific sector bet. Holding both XLC and XLK (while also holding a broad index) means you are overweighting roughly 35-40% of the S&P 500's market cap in technology-adjacent stocks — a meaningful concentration risk.
Officially, no — XLC tracks the Communication Services sector, not Technology. But practically, its largest holdings are internet platform companies (Meta, Alphabet) that most investors associate with tech. XLC also includes traditional media (Disney, Comcast), telecom (T-Mobile, Verizon), and streaming (Netflix). It is a blend of new digital platforms and older media/telecom companies, not a pure technology fund.
Both are highly concentrated at the top. XLK's top 3 holdings (Apple, Nvidia, Microsoft) account for roughly 55-60% of the fund. XLC's top 2 holdings (Meta, Alphabet) account for roughly 40% of the fund. These are not diversified sector funds — they are concentrated bets on a handful of mega-cap companies. The small number of holdings (24 in XLC, 68 in XLK) amplifies company-specific risk significantly versus a broader fund.
XLK has significantly outperformed XLC over most multi-year periods. Since XLC's 2018 launch, XLK's 5-year annualized return has exceeded XLC's by roughly 8-9 percentage points annually, driven by Nvidia's extraordinary performance and Apple and Microsoft's consistent returns. XLC has been dragged by legacy media and telecom names (Disney, Comcast, Verizon) despite strong performance from Meta and Alphabet. Past performance does not guarantee future results.
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.
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