Want to Buy a Tech Turnaround? This Low-Cost Vanguard ETF May Be Your Best Entry Point.
There is no doubt that the technology sector has had a rough first few months of 2026. In the first three months, the technology sector was doing very poorly. S&P 500 sector in large numbers. However, things got better in April.
From April 1 to April 21, technology was the S&P 500’s best-performing sector, rising more than 15%. The volatility of the industry will continue (especially as a way to earn valuable income), but if you’re looking for a low-cost way to gain exposure to the tech world, Vanguard Growth ETF (NYSEMKT: VUG) a good option.
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It covers many areas, and its expense ratio of 0.03% is one of the lowest in the stock market.
VUG is not a pure-play tech exchange-traded fund (ETF) that only holds technology companies, but the technology sector holds about 66% of the fund. That is more than 4 times the representation of the second most represented sector, consumer choice (16.2%).
The ETF is market-cap weighted, so most of its top holdings are large technology companies, including nine of the top 10:
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Nvidia: 13.31% of the ETF
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an apple: 12.32%
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Microsoft: 9.09%
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Alphabets (Class A): 5.54%
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Amazon: 4.59%
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Broadcom: 4.40%
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Alphabets (Class C): 4.38%
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Meta Platforms: 4.15%
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Tesla: 3.47%
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Eli Lilly: 2.59%
If you’re investing in tech, these are the companies you want in your portfolio. Instead of picking a “winner” (especially as it relates to the current gold rush of artificial intelligence), you can tap into the larger technology as a whole and continue to grow and excel.
With these holdings, you have the largest cloud providers, the largest percentage of enterprise software, AI hardware providers powering the AI boom, digital advertising giants, robotics companies, and much more.
And whenever the tech sector goes down, you have other sectors in the ETF to absorb some of the downside and mitigate the blow.
Since hitting the market in January 2004, VUG has experienced many ups and downs. It is the nature of the stock market in general, especially technology and growth stocks, that most investments are based on potential and future earnings.
Still, the VUG outperformed the S&P 500 during that period, rising 886% versus the index’s 511%. Most of the divisions have come in the last five years, with the rise of large numbers of technology. However, VUG’s performance has been consistent, with better annual returns in 17 of the last 22 years.
When investing in VUG, you should expect high volatility, especially given how much control the technology sector alone has over it. Your job is to wait, keep investing, and trust that it brings good long-term returns. So far, it has not disappointed with that idea.
Before buying shares of the Vanguard Growth ETF, consider the following:
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Stefon Walters holds positions at Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, Tesla, and the Vanguard Growth ETF. The Motley Fool has a policy of disclosure.
Want to Buy a Tech Turnaround? This Low-Cost Vanguard ETF May Be Your Best Entry Point. was first published by The Motley Fool
