Key Takeaways
- Tech stocks have boomed as companies have made huge investments in AI, lifting many funds with big tech holdings.
- The diversified US stock fund with the largest tech weighting is the Needham Small Cap Growth Fund.
- Other Needham strategies, along with several iShares ETFs and Morgan Stanley Growth, are among the funds with the the heaviest weightings to tech.
Tech stocks have surged in 2025, riding a wave of enthusiasm for (and corporate investment in) artificial intelligence technologies. Some funds have made especially large bets on the sector.
The funds with the largest tech holdings include several from Needham, a 30-year-old firm with a long history of investing in small and mid-sized growth companies, several iShares strategies, and Gold-rated Morgan Stanley Institutional Growth. For most (though not all) of these funds, the strategies have seen strong performance this year.
To find the funds with the largest allocations to tech stocks, we screened US diversified stock funds with more than $100 million in assets. All performance data is based on the lowest-cost share class and portfolio holdings are based on the fund’s most recent publicly reported information.
The fund with the largest allocation to tech is the $159 million Needham Small Cap Growth Fund NESIX, which has 80.2% of its assets invested in the sector—some five times the benchmark for its Morningstar category and roughly 45 percentage points more than tech’s weighting in the overall market, as measured by the Morningstar US Market Index. The $113 million Invesco ESG Nasdaq 100 ETF QQMG has the second-highest weighting to tech, with 63.8% of its assets in such stocks.
How Widely Held Is the Tech Sector?
The Morningstar US Technology Index is up 27.6% in 2025 so far, compared with a 16.7% return on the overall market as measured by the US Market Index. Out of the 2,013 US stock funds (excluding sector funds) we screened in Morningstar Direct, 119 had 50% or more of their assets in tech, while 298 had a 40% or higher allocation.
These numbers understate the weightings in companies that many investors might consider tech stocks but are part of other sectors. For example, Meta Platforms META and Alphabet GOOGL are both in the communications services sector, while Amazon AMZN falls under consumer cyclicals.
Which Funds Have the Biggest Allocations to Tech?
The 10 names with the highest weightings to tech were evenly divided between index and actively managed funds. All but one were growth funds, with seven falling into large-cap growth, one in small-cap growth, and one in midcap growth.
At the top of the list is the Needham Small Cap Growth Fund, with a tech sector allocation 80.2%. While the fund company’s strategies are aimed at growth stocks, this fund falls into the Morningstar small-cap blend category. “Technology remains a long-term strength of the economy, and several major secular trends persist firmly in place to support continued growth,” reads the fund’s second-quarter commentary. “Areas of long-term investment that we continue to like are data centers, communications infrastructure, defense, AI, cloud computing, wireless connectivity, software and security, and specialty material manufacturers. Innovation within our portfolio companies continues, and long term, we believe these investments will benefit the Fund.”
The fund’s 16.2% return in 2025 puts it in the top 4% of the small-cap blend category. The fund’s tech allocation contributed 21 points to its returns. The largest contributor to its returns was TTM Technologies TTMI, which manufactures electronic components such as radio and microwave transmitters. The stock—its second-largest holding, with a 5.7% weighting—skyrocketed 150.0% this year and contributed 6 points to the fund’s returns. The second-largest contributor was nLight LASR, a laser manufacturer up 200% this year, which contributed 5 points.
The fund with the second-highest allocation to tech is Invesco ESG NASDAQ 100 ETF. It has a 63.8% allocation to the tech sector, while the Large-Mid Cap Broad Growth Index has a 51.3% weighting. The ETF tracks the Nasdaq-100 ESG Index, which is composed of companies in the Nasdaq-100 that fit certain environmental, social, and governance criteria. Businesses included cannot be involved in certain industries, such as gambling, alcohol, cannabis, or oil and gas.
Another top holder is the $1.8 billion SP Funds S&P 500 Sharia Industry Exclusions ETF SPUS. The fund tracks the S&P 500 Sharia Industry Exclusions Index, which consists of stocks from the S&P 500 that follow certain criteria based on Islamic religious beliefs. The fund focuses on companies with low debt and excludes firms that make money from industries such as alcohol, gambling, and credit cards. Its 21.2% return puts it in the 24th percentile of the large-cap growth category.
Joining the Needham Small Cap Growth Fund is the $162 million Needham Growth Fund NEEIX, an actively managed fund in the mid-cap growth category. The fund has a 62.7% weighting to tech, while the Morningstar US Mid Cap Broad Growth Index has a 22.9% weighting.
A top tech holder from small-cap growth category is the $640 million Brown Capital Management Small Company Fund BCSSX. An actively managed fund, it holds a 59.9% allocation to tech, compared with the Morningstar US Small Cap Broad Growth Extended Index’s 22.7% weighting. The fund has been a longtime fan of tech, with a heavy allocation to the sector for nearly two decades, according to Tony Thomas, associate director at Morningstar.
“Since the mutual fund’s 1992 inception, the managers have defined small companies by operating revenue [of up to USD 500 million since April 2021],” writes Thomas in his analysis of the fund. “Within that range, the team seeks what it calls ‘exceptional growth companies.’ These firms should have differentiated products or services that save time, lives, money, or headaches, and which benefit from strong competitive positions and capable executives who can deliver long-term growth.”
The largest fund on the list is the $17.1 billion iShares Russell Top 200 Growth ETF IWY, which has a 59.7% weighting to tech. The fund tracks the index of the same name, which is composed of large-cap US growth stocks. The fund has returned 21.2% in 2205, putting it in the 23rd percentile of the large-cap growth category. The biggest contributor to its returns has been Nvidia NVDA, its largest holding, which added 5.5 points to its returns.
Not all funds that invest heavily in tech rely on the same big AI stocks, as shown by the actively managed Morgan Stanley Institutional Growth Fund MGRPX, a large-cap growth fund with a 58.7% allocation to tech. The fund’s 31.7% return in 2025 puts it in the 5th percentile of its category, and it has the highest year-to-date return out of any fund in this article.
“The strategy epitomizes active management,” writes Morningstar’s Robby Greengold. “Unlike broad-based growth indexes that tilt toward well-established giants that pervade peer funds’ portfolios, this portfolio is built around companies still in their formative years—businesses with short public histories, breakneck revenue growth, highly uncertain futures, and paltry current earnings.” Cloudflare NET, an IT services firm, is far and away its biggest success of 2025. The stock, up 130.4% so far this year, is the fund’s largest holding with a 12.5% weighting, and it’s contributed 12.8 points to the fund’s returns this year.
Unlike with other funds on this list, the tech holdings for the Brown strategy haven’t saved the strategy from posting losses in 2025. The fund’s 11.4% year-to-date loss leaves it in the 99th percentile of its category. The fund has taken it on the chin from losses that include its sixth-largest holding, supply chain software company Manhattan Associates MANH, which is down 32.8% this year, cutting 1.7 points from the fund’s returns.