Prediction: The Vanguard Information Technology ETF (VGT) Will Surge Over the Next 10 Years. Here's 1 Reason Why.
Key Points
This exchange-traded fund holds a portfolio of more than 300 tech stocks.
Much of its value comes from its holdings in a handful of well-known great performers.
Tech stocks can be more volatile than their counterparts in other sectors.
- 10 stocks we like better than Vanguard Information Technology ETF ›
Which companies are you most bullish about for the coming decade? Many investors would name companies such as Nvidia, Microsoft, and other members of the "Magnificent Seven." Buying into many such stocks individually, though, can be a bit of work, and then following all those companies will be a lot more work.
So consider simplifying your life and just investing in a tech-focused exchange-traded fund (ETF) such as the Vanguard Information Technology ETF (NYSEMKT: VGT). Why? Well, because with one investment, you'll immediately be invested in hundreds of technology stocks -- which together stand a good chance of outperforming the market over the long run. (An ETF is a fund that trades like a stock.)
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Basically, its diversity of quality holdings is key to its performance. And I believe this ETF should do quite well over the next 10 years.
Image source: Getty Images.
To whet your appetite, here's a breakdown of the Vanguard Information Technology ETF's long-term performance, contrasted with the performance of an S&P 500 index fund, in this case, the Vanguard S&P 500 ETF (NYSEMKT: VOO).
| Average Annualized Return |
Vanguard S&P 500 ETF |
Vanguard Information Technology ETF |
|---|---|---|
| 5 years | 16.63% | 20.50% |
| 10 years | 14.99% | 23.24% |
| 15 years | 14.55% | 20.28% |
Source: Morningstar.com. Figures as of Oct. 6, 2025.
To be clear, a simple, low-fee S&P 500 index fund like VOO is also worth your consideration. During periods that feature big market pullbacks, which can begin at any time, the broader S&P 500 is likely to pull back less sharply than a tech-heavy fund. And the S&P 500 has delivered solid average annual gains of close to 10% over long periods.
While there are 300-plus companies in the ETF, more than half of its value is in its top 10 holdings -- and especially in Nvidia, Microsoft, and Apple. So do be sure that you have confidence in the outlook for those businesses before buying shares of this fund. And for best results, plan to hold it for a long time.
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Selena Maranjian has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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