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If you're interested in broad exposure to the Technology - Broad segment of the equity market, look no further than the Vanguard Information Technology ETF (VGT), a passively managed exchange traded fund launched on 01/26/2004.
Exchange-Traded Funds can provide significant portfolio diversification, investing with long-term strategies. VGT is a top-heavy fund with holdings weighted in the Information Technology sector. The fund has an annualized return of over 20%, with YTD return above 19%.
Vanguard Information Technology ETF has outperformed since 2004, but is heavily concentrated in a few large-cap tech companies. VGT has consistently underperformed the broader NASDAQ index, with core holdings like Microsoft, Apple, and NVIDIA potentially overvalued. Signs of slowing global growth and a strengthening dollar may impact VGT's performance, making it a high-risk ETF with minimal diversity.
The Vanguard Information Technology ETF returned 1,500% over the last 15 years, boosted in part by semiconductor companies Nvidia and Broadcom. The information technology sector was the best-performing market sector during the last 15 years due to investment themes like cloud computing and mobile devices.
No investor wants to miss the wave of a massive, transformational technology. Spot these big shifts early, and you have a chance at Nvidia-like returns.
The current US economic landscape is unique. Many varying economic forces, making an ideal soft landing a matter of when. VGT has a unique portfolio concentrated enough to reap long-term benefits of technological development, but also account for volatilities in the economy through diversification into areas of information technology. Strong Quant Ratings amidst other technology-based ETFs, along with current economic and secular shifts that align comfortably with VGT's holdings, are also catalysts supporting my buy rating.
ETFs can help create a well-diversified portfolio with less time and effort. Industry-specific funds, like tech ETFs, can provide exposure to particular sectors while reducing risk.
Vanguard doesn't offer any AI-specific ETFs. However, three of its funds have heavy concentrations in leading AI stocks.
The Vanguard Information Technology ETF gives investors a large amount of exposure to three of the stocks benefiting the most from AI. The ETF has a strong record over the past decade.
The S&P 500 is up 15.7% this year, but one-third of that gain has come from a single stock: Nvidia. Investors who don't own Nvidia or its trillion-dollar tech stock peers have missed out on significant returns in 2024.