Riding the AI Wave: Vanguard Tech ETF Delivers Strong Returns

The Vanguard Information Technology ETF (VGT) continues to demonstrate impressive momentum, largely fueled by sustained enthusiasm surrounding artificial intelligence and cloud computing. These transformative technologies remain the primary catalysts driving performance across the U.S. technology sector and this concentrated exchange-traded fund.

A Closer Look at Portfolio Composition and Performance

VGT maintains a focused portfolio of 319 individual holdings, with significant weight given to industry leaders. The fund’s top ten positions represent a substantial 60.81% of its total assets, creating a powerful concentration in market giants:

• NVIDIA Corp commands an 18.17% allocation
• Microsoft Corp represents 15.40% of the fund
• Apple Inc holds a 12.71% weighting
• Broadcom Inc accounts for 4.70%
• Oracle Corp makes up 2.29%

This strategic emphasis means NVIDIA, Microsoft, and Apple collectively represent over 46% of the fund’s assets. While this creates notable concentration risk, it also delivers substantial rewards when these sector leaders perform well.

Recent performance among these top holdings has been varied. Broadcom surged 19.08% over a 30-day period, while AMD experienced a significant decline of 10.50%. Microsoft saw a modest decrease of 2.05% during the same timeframe.

Structural Shifts and Sector Performance

The technology sector is experiencing fundamental transformation, driven by relentless demand for AI infrastructure that is triggering massive investments in both hardware and software. Companies like Dell Technologies are reporting accelerated growth through strategic partnerships with chip manufacturers NVIDIA and AMD. Simultaneously, the ongoing expansion of cloud services continues to support robust fundamental growth across the entire technology landscape.

Should investors sell immediately? Or is it worth buying Vanguard Information Technology Index Fund ETF Shares?

VGT has delivered solid returns across multiple time periods, demonstrating its strength:

• One-month gain: 3.03%
• Three-month advance: 14.66%
• Twelve-month return: 28.19%
• Year-to-date performance: 12.70%

The fund maintains excellent liquidity with an average of 478,000 shares traded daily. Investor interest remains strong, evidenced by substantial net inflows of $4.44 billion over one month and $15.11 billion over three months.

With a minimal premium of 0.05% to its net asset value and low expense ratio of 0.09%, the ETF remains a cost-efficient vehicle for technology exposure.

Competitive Positioning and Investment Profile

When compared to similar technology ETFs like XLK and FTEC, VGT maintains its position as a cost-competitive option for sector exposure. The fund provides pure technology sector allocation according to GICS standards, focusing exclusively on U.S. equities without geographical diversification.