Vanguard's Information Technology ETF has outperformed the S&P 500, but may face challenges in 2025

From Nasdaq: 2025-01-31 05:30:00

Exchange-traded funds (ETFs) simplify investing by tracking market indexes or sectors, reducing the risk of selecting individual stocks. Tech-focused ETFs have thrived post-2008, offering broad exposure to transformative technologies. Vanguard’s Information Technology ETF (VGT) has outperformed with a low expense ratio of 0.10% and a 29.3% gain in 2024, exceeding the S&P 500’s 25% return.

The Vanguard Information Technology ETF faces challenges in 2025 due to concentrated holdings in Apple, Nvidia, and Microsoft. Elevated valuations and strategic concerns could impact performance. DeepSeek’s AI models have raised questions about the need for extensive AI investments, creating a complex landscape for market leaders to navigate.

Investors should evaluate the fund’s risk-reward profile in light of changing market dynamics. While the Vanguard ETF may not offer the same outperformance as before, its exposure to AI leaders positions it well for long-term growth. AI’s transformative impact on industries and societies makes the fund a compelling long-term investment opportunity.

The Motley Fool’s Stock Advisor team recommends 10 stocks for monster returns, excluding the Vanguard Information Technology ETF. Consider Nvidia’s historical success for potential gains. Stock Advisor offers guidance on portfolio building and regular updates, outperforming the S&P 500 since 2002. Suzanne Frey from Alphabet serves on The Motley Fool’s board.



Read more at Nasdaq: Can This Popular Vanguard Tech ETF Trounce the S&P 500 Again in 2025?