A Different Type Of Tech ETF

The technology sector, the largest sector weight in the S&P 500, has been a primary driver of upside for the broader market this year, bringing renewed attention to the sector's exchange traded funds.

Several technology ETFs hit all-time highs on Tuesday, one of which was the SPDR Morgan Stanley Technology ETF (NYSE:MTK). MTK tracks the Morgan Stanley Technology Index, which is a departure from the usual tech indexes that are often heavily allocated to Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and just a few other names.

In fact, neither Apple, Microsoft nor Google parent Alphabet Inc. (NASDAQ:GOOG) are found among MTK's top 10 holdings. The ETF is an equal-weight fund, which can be advantage during times when a stock like Apple or Google falls out of favor with investors. Conversely, if large- and mega-cap tech names are leading the sector higher, an equal-weight fund could lag its cap-weighted counterparts. Still, MTK is higher by more than 6 percent year-to-date.

There was a time when technology sector and dividends didn't belong in the same sentence, unless that sentence was saying the former didn't deliver much of the latter. Times change, of course, and when it comes to changing times for technology stocks and dividends, times are changing for the better.

In addition to being one of the biggest contributors to the buyback boom of recent years, technology stocks have also been major drivers of the S&P 500's dividend growth since the financial crisis. In fact, technology, the S&P 500's largest sector weight, is now one of the benchmark U.S. equity index's biggest dividend-paying groups in dollar terms.

MTK does offer some exposure to the rising dividend theme in the tech space, but the ETF does blend in some familiar growth names as well. Facebook Inc (NASDAQ:FB) is one of MTK's top 10 holdings.

Due to a 16.2 percent weight to Internet software and services providers, MTK also features Amazon.com, Inc. (NASDAQ:AMZN) among its top 10 holdings. That is a departure from standard tech ETFs because Amazon is classified as a consumer discretionary name, meaning when it comes to sector ETFs, it is primarily discretionary not tech funds that hold shares of the ecommerce giant.

The $533 million MTK holds 37 stocks. MTK charges 0.35 percent per year, or $35 on a $10,000 investment.