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The S&P 500 (^GSPC 0.88%) delivered a return of 23% in 2024, which was more than double its average annual gain dating back to when it was established in 1957. However, had you invested in the Vanguard Information Technology ETF (VGT 0.82%) instead, you would have earned a return of 32% for the year.
ETFs are one of our favorite investment instruments. They provide exposure to a large swath of stocks, allowing you to quickly diversify your portfolio with a single purchase.
The technology sector, despite slowing earnings growth, remains attractive due to solid future earnings expectations and AI potential, with Vanguard Information Technology Index Fund ETF Shares (VGT) being a top choice for exposure. With nearly $100 billion in assets, VGT offers broad exposure to tech stocks, including small and mid-caps, and has a low expense ratio of 0.1%. VGT's top holdings are concentrated, but that is a feature in similar funds like XLK and IYW.
If you're looking for a more passive approach to investing but don't want to sacrifice your potential gains, there's an obvious solution -- exchange-traded funds, or ETFs. These of course are pre-selected baskets of stocks bought and sold as a group.
The S&P 500 entered its current bull market in October 2022 and has since advanced 65%, led by a 130% gain in the technology sector. But equity analyst Dan Ives at Wedbush says the bull market will run for another two to three years, and he believes technology stocks could soar 25% in 2025.
Investing in a growth ETF can be a smart way to build your portfolio with minimal effort. A growth ETF is a collection of stocks that have the potential to earn higher-than-average returns, grouped together into a single investment.
The right investment has the power to transform your portfolio, and exchange-traded funds (ETFs) can be a smart way to supercharge your savings with very little effort.
The technology sector is witnessing the rise of two transformative subsectors that are reshaping the future. Agentic AI, the next evolution in artificial intelligence (AI), empowers machines to make autonomous decisions and proactively complete complex tasks without constant human oversight.
Technology stocks have consistently beat the S&P 500, and that trend could continue as AI spending increases.
VGT is a solid technology sector fund with a low expense ratio and superior risk-adjusted performance, despite slightly lagging its peers in total return. Technology's recent underperformance is due to overvaluation and crowded positioning, but these issues are fading, making the sector attractive again. I rate VGT a "buy" but suggest waiting for a better entry point around $550, or buying if it breaks the $610 all-time high convincingly.