While the technology sector more than likely offers the best chance for maximum upside, its underlying risks warrant a closer look at the best tech funds to buy. Don’t get me wrong. Acquiring individual innovators can be immensely rewarding. However, you don’t want to ignore the utility of the leading tech funds.

First, these exchange-traded funds (ETFs) provide a wide canvas. Rather than exposing your portfolio to a single enterprise, you command a basket of securities. Therefore, it’s important to consider the top tech funds for August because, frankly, some names (while relevant) appear overheated.

And that segues to another discussion point: ETFs facilitate greater confidence for those wanting to get their feet wet. Sure, you can always buy the individual entities that comprise these must-buy tech funds. Not only that, the underperformance of names that you don’t want in the basket could hurt your overall position.

However, this concept also works the other way too. Plus, with so many unknowns in the broader economy, going the ETF route might make sense. With that, below are tech funds for investment in August.

Global X Artificial Intelligence & Technology ETF (AIQ)

Thanks to the ChatGPT phenomenon, investors can’t get enough of artificial intelligence. However, if you believe the machines will take over the world someday, you should consider the Global X Artificial Intelligence & Technology ETF (NASDAQ:AIQ). Basically, you’re going to get exposure to high-quality names, making AIQ one of the best tech funds to buy. At the same time, you’re protected if some of your favorite individual ideas turn out to be stinkers.

Leading off the fund is internet tech giant Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), which comprises 3.34% of total net assets. In a close second place is e-commerce and cloud computing stalwart Amazon (NASDAQ:AMZN) at 3.28%. Rounding out the top three is Meta Platforms (NASDAQ:META) at 3.24%. I also appreciate the legacy firm IBM (NYSE:IBM), which represents 3.2% of net assets and offers a strong yield.

Of course, being one of the top tech funds for August, the namesake industry represents the vast majority of sector weightings at 63.71%. However, AIQ is diverse, with communication services and consumer cyclical making up 14.25% and 12.02%, respectively. One thing to watch, though: AIQ incurs an expense ratio of 0.68%, which is higher than average.

SPDR S&P Kensho Smart Mobility ETF (HAIL)

You’ve heard it before: electric vehicles represent the future of transportation and personal mobility. However, it’s just so darn difficult to know which individual EV brand will win out. For those who are sure about the electrified future but want to play it relatively safe, consider the SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL). It’s one of the best tech funds to buy for its wide scope.

Undergirding the HAIL ETF are some of the most popular EV startups. We’re talking about names like China’s Nio (NYSE:NIO), which features 2.36% of total net assets. Also, Rivian Automotive (NASDAQ:RIVN) makes its presence known here with a 2.34% net asset weighting.

At the same time, HAIL includes some very questionable ideas. However, that’s also one of the reasons why HAIL could be one of the must-buy tech funds. If you really believe in this space, the winners might easily outpace the losers. Finally, HAIL is relatively cheap with an expense ratio of 0.45%. In contrast, the category average stands at 0.55%.

iShares Self-Driving EV and Tech ETF (IDRV)

In terms of narratives for best tech funds to buy, few are as compelling as the autonomous driving sector. According to McKinsey & Company, this segment could create $300 billion to $400 billion in revenue by 2035. However, it’s difficult to know for certain which company will ultimately lead this paradigm-shifting arena. Therefore, iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV) makes plenty of sense.

According to its prospectus, the company’s top holdings are Rivian at 5.86% of total net assets, followed by EV pioneer Tesla (NASDAQ:TSLA) at 4.11% and auto tech supplier Aptiv (NYSE:APTV). If you target just one of these companies, your portfolio might get volatile. Thus, there’s safety in numbers.

Interestingly, IDRV is one of the most geographically diverse tech funds for investment in August. While the U.S. represents the lion’s share at 37.1%, the regions Asia Developed and Asia Emerging combined account for 31.2%. Also, the Eurozone itself pings at 14.1%. To be fair, one drawback for the IDRV fund is the expense ratio. At 0.47%, it’s just under the category average of 0.48%.

First Trust Cloud Computing ETF (SKYY)

Undeniably, cloud computing represents a major growth sector. According to Mordor Intelligence, the segment could expand at a compound annual growth rate (CAGR) of 16.4% from 2023 to 2028. At the culmination of the forecast period, the industry could be worth $1.24 trillion. Therefore, First Trust Cloud Computing ETF (NASDAQ:SKYY) deserves consideration for best tech funds to buy.

Per its prospectus, its top holding is Pure Storage (NYSE:PSTG), which specializes in all-flash data storage hardware and software products. PSTG accounts for 4.69% of total net assets. Next up is Amazon at 4.24%, followed by IBM at 4.14%. Unlike autonomous driving ETF above, the First Trust Cloud Computing ETF is quite narrow in its focus. Pure tech companies represent 88.35% of the sector weighting while U.S.-based companies comprise 95% of the fund.

While commanding exceptional relevance, SKYY is undeniably pricey with an expense ratio of 0.6%. This compares unfavorably to the category average of 0.55%. However, SKYY is a top performer, gaining nearly 34% of market value.

ETFMG Prime Cyber Security ETF (HACK)

Although we can talk all day about the most innovative enterprises, I would be remiss not to mention cybersecurity. While conveniences and productivity are rising, so are nefarious activities. According to Cybersecurity Ventures, global cybercrimes may reach a staggering cost of $10.5 trillion by 2025. Therefore, ETFMG Prime Cyber Security ETF (NYSEARCA:HACK) pretty much sells itself as one of the best tech funds to buy.

Looking at its prospectus, HACK’s top holding is Booz Allen Hamilton (NYSE:BAH), a government and military contractor specializing in intelligence. BAH accounts for 5.29% of total net assets. In second place is science applications firm Leidos (NYSE:LDOS) at 4.97% and communications stalwart Cisco Systems (NASDAQ:CSCO) at 4.66%. In terms of sector weightings, the tech space dominates at 89.02%. The rest of the holdings are concentrated in the industrials space at 10.98%. Geographically, most of the companies (86.4%) are based in the U.S.

Like the other leading tech funds, HACK is a bit pricey with an expense ratio of 0.6%. That’s above the category average of 0.55%. However, it’s a solid runner at almost 16% up since the start of the year.

iShares Semiconductor ETF (SOXX)

While the chip-manufacturing space has recently suffered red ink due to concerns about consumer demand, investors with a long-term view should consider acquiring units of iShares Semiconductor ETF (NASDAQ:SOXX). According to Precedence Research, the global semiconductor market reached a valuation of $591.8 billion in 2022. By 2032, analysts project that the segment could expand at a CAGR of 12.28%, reaching over $1.88 billion.

Based on the prospectus, graphics processor manufacturer Nvidia (NASDAQ:NVDA) stands in pole position, accounting for 8.81% of total net assets. In second place is Broadcom (NASDAQ:AVGO) at 8.15% followed by heated Nvidia rival Advanced Micro Devices (NASDAQ:AMD) in third at 7.15%.

In terms of sector weighting, SOXX represents a pure play among the top tech funds for August, meaning that it’s 100% focused on technical innovation. As for geographic breakdown, 86.4% of companies are based in the U.S. The rest are from the Eurozone (7.7%) and Asia Developed (5.9%). Lastly, one reason to consider SOXX as one of the must-buy tech funds is its expense ratio of 0.35%. That’s a sizable discount compared to the category average of 0.55%.

Global X E-Commerce ETF (EBIZ)

For perhaps the most surefire idea for best tech funds to buy, investors should consider Global X E-Commerce ETF (NASDAQ:EBIZ). Focusing on the namesake industry, the arena should enjoy strong growth following the unique impact of the Covid-19 outbreak. According to Grand View Research, the global e-commerce sector might expand from a $9.09 trillion valuation in 2019 to a stunning $27.15 trillion by 2027.

From its prospectus, MercadoLibre (NASDAQ:MELI) – an Argentine-based operator of online marketplaces – leads off EBIZ at 4.73% of total net assets. Coming in second place is travel technology firm Booking Holdings (NASDAQ:BKNG) at 4.67% and online furniture and home goods retailer Wayfair (NYSE:W) at 4.63%.

In terms of sector weightings, the consumer cyclical space unsurprisingly dominated at 78.1%. In a distant second is technology at 9.47% and communications services at 6.86%. Geographically, U.S.-based companies account for 52.1% of EBIZ. Finally, this e-commerce ETF features an expense ratio of 0.5%, just a bit under the category average of 0.54%. Still, it makes up for the cost by posting a near-20% return since the beginning of this year.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.