This Tech-Focused Vanguard Fund Is Crushing the Market This Year
Key Points
The Vanguard Information Technology ETF gives investors exposure to a wide range of tech stocks.
Micron Technology is a top holding, and its massive gains are a big reason the ETF has done so well.
With the market at record highs, however, there can be elevated risk for tech investors these days.
- 10 stocks we like better than Vanguard Information Technology ETF ›
The S&P 500 has risen an impressive 14% this year, as investors have remained bullish on top growth stocks. The broad index has averaged an annual return of around 10% for decades. And it's been outperforming that for three straight years, which is why it's noteworthy that it's still this hot.
But one exchange-traded fund (ETF) that's been an even hotter buy, giving investors exposure to the world's top tech stocks, is the Vanguard Information Technology ETF (NYSEMKT: VGT). Year to date, it's up over 30%. Is the ETF still a good buy today?
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Why has the Vanguard Information Technology ETF been doing so well in 2026?
The Vanguard fund focuses on techs stocks, which have been hot buys not only this year but since about 2023, when ChatGPT arrived on the scene, leading to a wave of bullishness in the markets. Since then, the ETF has risen more than 200%, while the S&P 500 has doubled in value.
While the ETF has 321 holdings and provides broad exposure to different types of tech stocks, the top five stocks in the fund account for nearly half of its portfolio. Nvidia, Apple, Microsoft, Micron Technology, and Broadcom are its largest holdings, and although not all of them have performed exceptionally well this year, one stock has clearly stood out from the pack.
Top VGT Stocks data by YCharts
Amid a memory and storage shortage in the markets, Micron and other similar stocks have been on a tear this year and have played a big role in this Vanguard fund doing as well as it has. If Micron had a larger position in the fund, then the ETF would be up even more than it is.
Is investing in the Vanguard Information Technology ETF still a good move right now?
Investing in tech stocks is risky right now, as valuations are extremely high, which means there isn't much, if any, buffer or margin of safety for investors buying at these levels. The market is at record levels, yet macroeconomic challenges and geopolitical risks could weigh on stocks in the near term. There's even the risk of future interest rate hikes, especially if inflation doesn't come down to the 2% level the Fed targets; currently, it's still well above 3%.
While the Vanguard Information Technology ETF has done incredibly well this year, I wouldn't buy it. At this stage, there appears to be much more downside risk than upside. Now may be a time for investors to consider safer investment options; loading up on tech could add significant risk.
Should you buy stock in Vanguard Information Technology ETF right now?
Before you buy stock in Vanguard Information Technology ETF, consider this:
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Broadcom, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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