The Vanguard Information Technology ETF: Why It Stands Out in Today's Market

Performance That Speaks for Itself

When evaluating what is the best ETF to buy right now, performance metrics tell an important story. The Vanguard Information Technology ETF (VGT) has delivered impressive returns this year, climbing 21% compared to the S&P 500’s 17% gain. Over the past decade, this tech-focused fund has achieved the highest annualized returns among all Vanguard offerings, reaching 22% annually.

These numbers aren’t accidental. The ETF’s structure—tracking an index concentrated in technology stocks—positions it perfectly to capture the sector’s growth drivers. With 314 holdings and a razor-thin expense ratio of just 0.09%, investors keep more of their gains compared to actively managed alternatives.

The AI Tailwind and Beyond

The current market environment has fundamentally altered how technology stocks perform. The S&P 500’s strong performance this year owes much to artificial intelligence advancement, and since the index is weighted toward larger companies, these gains concentrate heavily in mega-cap tech names.

The Vanguard Information Technology ETF follows a similar logic. Its three largest positions—Nvidia, Apple, and Microsoft—together represent approximately 45% of the fund’s value, giving investors direct exposure to leaders driving AI innovation. However, this ETF isn’t trapped in a single trend. Because it tracks a tech sector index and employs passive management, its composition evolves as market dynamics shift. Whatever technology trends capture investor attention eventually flow through to the ETF’s holdings.

A Long-Term Building Block

The appeal of this fund extends beyond current momentum. Passively managed ETFs with low fees have consistently outperformed their actively managed counterparts over extended periods. The Vanguard Information Technology ETF combines this advantage with exposure to a sector that continues generating headline-grabbing returns.

For investors building diversified portfolios, understanding what is the best ETF to buy requires looking beyond quarterly performance. This fund’s decade-long track record, combined with its reasonable cost structure and dynamic sector exposure, demonstrates why many consider it a compelling holding in technology-focused allocations.