Invest in Vanguard Information Technology ETF for potentially higher returns than S&P 500.

From Nasdaq: 2024-09-28 11:21:00

The S&P 500 index reflects the health of the American stock market, with the SPDR S&P 500 Trust offering solid diversification and robust long-term returns. Investing $1,000 in the fund 10 years ago with reinvested dividends would result in $3,500 today, outperforming inflation rates at a CAGR of 13.2%.

The Vanguard Information Technology ETF has been outperforming the S&P 500 with a CAGR of 20.9% over the last decade. A $1,000 investment would have grown to $6,678 with no additional cash investments. Regular contributions could have boosted investments to $41,118 over a decade, showing superior returns compared to the S&P 500.

Although the Vanguard IT ETF has historically outperformed the S&P 500, there are risks to consider. During market downturns, the fund focused on growth stocks can result in negative returns. The fund’s emphasis on high-growth ideas can lead to volatile swings in value, making it unsuitable for risk-averse investors.

The Vanguard IT ETF’s portfolio focuses on American tech stocks, with the top holdings being Apple, Microsoft, and Nvidia. These large companies make up a significant portion of the portfolio, but the fund includes smaller tech businesses not part of the S&P 500. This different balance raises market risks but also enhances potential returns.

Consider your risk tolerance before investing in the Vanguard Information Technology ETF. While it offers exciting high-growth opportunities, it may not be suitable for all investors. The fund’s performance can be volatile, but its long-term returns have consistently surpassed the S&P 500. Evaluate your investment goals and risk appetite before choosing this ETF.

Before investing in Vanguard World Fund – Vanguard Information Technology ETF, consider other top stock picks by analyzing the Motley Fool Stock Advisor team’s recommendations. The 10 stocks they identified could generate significant returns in the future, potentially outperforming ETFs like Vanguard IT. Conduct thorough research and consult with a financial advisor to make informed investment decisions.



Read more at Nasdaq: You Can Do Better Than the S&P 500. Buy This ETF Instead.