This Vanguard ETF Is Built for a Market That's Finally Rotating Away From Big Tech

For most of the past decade, the simplest way to make money in stocks was to buy the biggest technology companies and hold on. In 2026, however, that approach has largely stopped working. The seven megacap names often lumped together as the "Magnificent Seven" have lagged as a group this year, and investors have been pulling money out of crowded growth stocks and into value names, dividend payers, and old-economy corners of the market like energy, industrials, and financials.

So if this rotation has staying power, which low-cost fund is actually built to capture it?

One idea is the Vanguard Value ETF (NYSEMKT: VTV). It holds more than 300 large-cap value stocks for an expense ratio of just 0.03% -- about $3 a year on a $10,000 investment. With around $179 billion in assets, it's one of the largest and cheapest ways to own a part of the market that's leading right now.

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What's inside the fund

The fund tracks the CRSP U.S. Large Cap Value Index, and its makeup looks almost nothing like the S&P 500. Financials are the largest sector at about 21% of assets, followed by industrials at 16%, healthcare at 13%, and energy at about 7%. Several of those exposures overlap with sectors investors have rotated toward this year.

Technology, by contrast, is only about 13% of the fund. That's a wide gap relative to the broader market, where the Magnificent Seven alone account for roughly a third of the S&P 500's value. Owning the value fund means owning far less of the megacap tech that has driven -- and lately dragged -- the index.

The top holdings reinforce the point. The fund's biggest positions include JPMorgan Chase, Berkshire Hathaway, ExxonMobil, Johnson & Johnson, and Walmart -- a lineup of banks, energy, healthcare, and consumer staples rather than high-growth software and chips.

That said, the fund isn't tech-free. Its largest holding is actually memory-chip maker Micron Technology, and it also owns Intel and Cisco Systems.

Why the fund's makeup fits this market

The case for the fund comes down to what it owns and what it costs.

Looking to valuation, the stocks inside trade at about 22 times earnings, below the approximately 25 times the S&P 500 commands. Of course, value stocks almost always trade cheaper than the broader market. But that gap can matter more when investors are growing skeptical of the lofty multiples attached to some of the hot investments tied to AI.

The fund also pays investors while they wait. Its dividend yields about 1.9% -- not huge, but more than the broad index pays, and a reflection of the steady, cash-generating businesses that fill the portfolio.

Then there's the fund's cost. With an expense ratio of just 0.03%, that attractive fee compounds over the years into a meaningful advantage over pricier active funds chasing the same stocks.

The bigger reason the makeup fits, though, is that most of the sectors the fund is weighted toward don't depend on the AI spending boom, which is now under pressure. Additionally, banks, insurers, energy producers, and industrial companies are generally less speculative than many AI stocks, generating earnings and paying dividends today rather than asking investors to underwrite years of heavy AI spending before the payoff arrives. When the market sours on that spending, investors may look for exactly the kind of businesses this fund is full of.

None of this is a forecast about how long the rotation lasts -- and that's the honest risk. If the megacap tech names rebound sharply, a value fund built to avoid them will likely lag. Its heavy weighting in financials and energy also ties it to the economy and commodity prices in a way the broad index isn't.

Still, for an investor who thinks the market's leadership is broadening out, I'd argue the Vanguard Value ETF is one of the simplest, cheapest ways to lean that way -- without having to guess which individual value stock comes out on top.

JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Sparks and his clients have has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Cisco Systems, Intel, JPMorgan Chase, Micron Technology, Vanguard Value ETF, and Walmart. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.