Why Vanguard Information Technology ETF Stands as a Popular Choice in Today's Market

When it comes to building a diversified investment portfolio, exchange-traded funds have emerged as a cornerstone for many investors over the past decade. Among the various options available, the Vanguard Information Technology ETF (ticker: VGT) has gained significant traction as one of the most popular ETF selections for those seeking exposure to the technology sector. This popularity isn’t accidental—it reflects the fund’s solid performance, strategic holdings, and alignment with current market trends.

The AI Catalyst Driving This Popular Tech ETF

The remarkable growth trajectory of the S&P 500 during 2025 owes much to the explosive advancement in artificial intelligence technologies. As a weighted index where the largest companies disproportionately influence overall performance, the S&P 500 has been substantially lifted by major tech players. The Vanguard Information Technology ETF mirrors this dynamic by focusing on a tech-heavy index. Currently, this fund contains 314 stocks, with AI-related companies forming a meaningful portion of its holdings—particularly industry giants like Nvidia, Apple, and Microsoft, which collectively represent approximately 45% of the fund’s total assets.

What makes this composition particularly compelling is that the fund structure ensures exposure to AI growth through the sector’s most established leaders. For investors seeking to benefit from the artificial intelligence revolution without hand-picking individual stocks, this ETF provides efficient access.

A Diversified Approach to Technology Sector Exposure

While AI dominance captures headlines, the strength of this fund lies in its broader technology mandate. Since the Vanguard Information Technology ETF is passively managed and tracks a comprehensive tech index, its composition naturally evolves as market trends shift. What’s trending in technology today will be reflected in the fund’s holdings tomorrow, providing investors with a dynamic exposure to the sector without requiring active management decisions.

The fund’s expense ratio of just 0.09% is a significant advantage, meaning investors retain a higher percentage of their gains compared to actively managed alternatives. This low-cost structure has historically contributed to superior market performance, demonstrating that keeping costs minimal can drive meaningful long-term wealth accumulation.

Historical Performance and Market Outperformance

The numbers tell a compelling story about VGT’s track record. In 2025, the fund delivered a 21% return, outpacing the S&P 500’s 17% gain. Looking at a longer timeline, the fund has achieved an impressive 22% annualized return over the past decade—the highest among all Vanguard ETF options. This extended track record suggests that the fund’s popular status among investors is supported by substantive performance results rather than temporary market conditions.

To contextualize these returns, consider historical precedent: investors who bought Netflix when it appeared on Motley Fool’s recommendation list in December 2004 would have turned a $1,000 investment into $556,658. Similarly, Nvidia investors who acted on a recommendation in April 2005 would have grown $1,000 into $1,124,157. While past results cannot guarantee future performance, these examples illustrate the potential wealth-building power of technology sector investments when selected wisely.

Making Your Investment Decision

Before committing capital to this ETF, investors should recognize that financial advisors and research teams continue to identify individual stock opportunities that may offer even greater return potential. The Motley Fool Stock Advisor service, for example, maintains a curated list of 10 stocks believed to offer exceptional future returns—a list that didn’t include VGT in its most recent update. The distinction matters: while VGT provides broad, efficient technology exposure, concentrated individual stock selections can sometimes deliver outsized gains.

That said, the choice between VGT and individual stock picking depends on your investment philosophy. Those seeking systematic, diversified technology exposure with minimal fees should certainly give this popular ETF serious consideration. Its combination of strong historical performance, alignment with transformative AI trends, and cost efficiency makes it a defensible core holding for technology-focused portfolios.