From The Motley Fool: 2024-05-31 08:15:00

The Vanguard Information Technology ETF has seen sustained earnings growth, outperforming both the S&P 500 and Nasdaq Composite over the past three years. With a total return of just over 50% in the last three years and 187.6% over the last five years, this tech sector ETF offers exposure to top stocks like Microsoft, Apple, and Nvidia at a low expense ratio of 0.10%.

Tech stocks are divided into categories like semiconductors, software, and hardware. The Vanguard Information Technology ETF weights its holdings accordingly, with top stocks like Nvidia, Microsoft, and Dell Technologies representing different sectors within the tech industry. The fund offers exposure to a diverse range of tech companies, from high-growth software stocks to industrial and manufacturing companies like Amphenol.

Investing in the tech sector comes with high valuations, but the growth potential justifies the prices. Forward P/E ratios show that many tech stocks have reasonable valuations based on earnings projections. The Vanguard Information Technology ETF offers a balanced exposure to high-growth tech stocks, making it an attractive option for investors looking to capitalize on the sector’s earnings growth.

Despite the high valuations in the tech sector, sustained earnings growth continues to drive stock prices higher. Companies like Nvidia have seen significant stock price increases due to strong earnings growth, indicating the importance of earnings growth as a catalyst for sustained rallies. Tech remains a strong long-term buy for investors with a high-risk tolerance and a three- to five-year investment horizon.



Read more at The Motley Fool: This Vanguard ETF Just Hit an All-Time High as It Continues to Outperform the S&P 500 and the Nasdaq Composite Over the Last 3 Years