Vanguard's growth-focused exchange-traded funds (ETFs) have posted impressive returns, fueled by key technology and artificial intelligence stocks, outpacing the S&P 500 over the long term.
VGT Leads with 23% Year-to-Date Gain
The Vanguard Information Technology ETF (VGT) has risen 23% year to date, more than doubling the S&P 500's gain.
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It holds 321 components, with major tech companies like Nvidia, Apple, Microsoft, Micron Technology, and Broadcom making up nearly half of the fund's assets.
VGT tracks the MSCI US Investable Market Information Technology 25/50 Index, focusing at least 80% of its assets on U.
S. technology stocks across software, hardware, and semiconductors.
The fund regularly adjusts its holdings based on stock performance, reducing risk by selling underperformers.
Its long-term performance is notable, with a 25.6% annualized return over the past 10 years, making it one of Vanguard's best-performing ETFs since inception.
VUG Delivers 1,150% Total Return Over 20 Years
The Vanguard Growth ETF (VUG) has generated a total return of 1,150% over the past 20 years, equivalent to a 13.2% annualized growth rate.
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This outperforms the S&P 500's 786% total return in the same period.
Investing $100 monthly in VUG using a dollar-cost averaging strategy could grow to $106,000 in 20 years, assuming historical performance repeats.
VUG holds 147 stocks, with over 69% in the technology sector, reflecting a focused bet on AI's potential impact.
Nvidia, Apple, and Microsoft are the top three positions, accounting for 32% of the ETF's assets.
These technology giants, along with other major contributors known as the Magnificent Seven, largely drive the fund's performance.
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The Motley Fool Stock Advisor team highlighted the importance of understanding a fund's composition before investing, noting that while Vanguard Growth ETF offers strong returns, other stocks may present higher future growth opportunities.
