Why the Vanguard Information Technology ETF Could Be One of the Best ETFs to Buy Right Now

Exchange-traded funds have transformed into a cornerstone investment vehicle for both novice and experienced investors. Among the expanding universe of passive and actively managed options, identifying which ETF offers the best combination of growth potential and cost efficiency remains a challenge. The Vanguard Information Technology ETF stands out as one of the best ETFs available for investors seeking exposure to technology sector gains, particularly in an era when tech innovation drives broader market momentum.

How Artificial Intelligence Is Reshaping the Tech Landscape—and This ETF’s Composition

The technology sector’s dominant performance in recent years stems largely from breakthroughs in artificial intelligence. Because market indices are weighted by company size, mega-cap tech firms account for a disproportionate share of overall index movements. The Vanguard Information Technology ETF similarly follows a technology-focused index, meaning its holdings naturally concentrate in AI-related stocks—not by design, but because these companies represent the largest and most influential names in tech today.

With 314 holdings in its portfolio, the fund maintains substantial positions in Nvidia, Apple, and Microsoft, which collectively represent approximately 45% of its total value. This concentration provides investors direct access to the leaders driving artificial intelligence advancement while maintaining diversification through hundreds of smaller tech companies. The fund’s passive, index-tracking structure ensures that as technological priorities shift, the portfolio automatically rebalances to reflect emerging trends without requiring active intervention.

The Cost Advantage: Why Expense Ratios Matter Over Time

One often-overlooked factor separating superior ETFs from mediocre ones is the expense ratio—the annual cost charged to hold the fund. Vanguard’s technology offering carries a remarkably lean expense ratio of just 0.09%, meaning investors retain virtually all gains rather than seeing significant portions eroded by management fees. This seemingly small difference compounds dramatically over decades, allowing investors to capture returns that would otherwise disappear through fee drag.

The impact of this cost efficiency appears clearly in the fund’s long-term results. Over the past decade, the Vanguard Information Technology ETF has delivered annualized gains of 22%—the highest figure among all Vanguard ETFs. This decade-spanning track record demonstrates that low-cost, passive exposure to technology trends produces results that rival or exceed actively managed alternatives charging substantially higher fees.

Performance That Speaks for Itself: Beating the Broad Market

During 2025, the fund climbed approximately 21%, outpacing the S&P 500’s 17% advance for the same period. While some might attribute this outperformance exclusively to artificial intelligence enthusiasm, the reality proves more nuanced. The ETF’s structural advantages—technological diversification across 314 companies, exposure to cyclical and secular growth trends, and ultra-low costs—create a resilient vehicle that consistently delivers excess returns regardless of which specific tech theme dominates market headlines.

This consistent outperformance isn’t accidental. By holding a representative sample of the technology sector rather than cherry-picking a handful of “hot” stocks, the fund captures broad-based industry expansion while avoiding the concentration risk that accompanies heavily focused portfolios.

Adapting to Market Evolution: The Fund’s Built-In Flexibility

Perhaps the most underappreciated strength of passive ETF investing is automatic adaptability. As technology trends evolve and new priorities emerge, the underlying index naturally incorporates changing market dynamics. Investors don’t need to predict which innovations will matter most; the market structure does this automatically. If artificial intelligence dominates for the next five years, the ETF reflects that reality. Should semiconductor innovation, cloud infrastructure, or cybersecurity take the lead afterward, portfolio weights shift accordingly without requiring investor oversight.

This mechanism distinguishes the fund from static portfolios or theme-specific ETFs that require periodic reinvention. The Vanguard Information Technology ETF remains perpetually aligned with where capital flows within the technology sector.

Weighing Your Investment Options: The Bottom Line

Deciding whether to buy this best-in-class technology ETF requires honest assessment of your investment timeline and risk tolerance. For investors comfortable holding technology exposure over extended periods—particularly those seeking broad sector access rather than concentrated bets on individual companies—the fund presents a compelling opportunity.

The combination of sector-leading holdings (Nvidia, Apple, Microsoft), cost efficiency (0.09% expense ratio), proven decade-long performance (22% annualized gains), and automatic market adaptability creates a rare combination. While no investment guarantees future returns, the Vanguard Information Technology ETF’s structural advantages position it favorably for capturing technology sector growth as business and consumer priorities continue evolving.

Ultimately, determining whether this ranks as the best ETF for your circumstances depends on personal factors: your investment horizon, diversification needs, and conviction regarding technology’s ongoing importance to economic growth. Yet for investors confident in technology’s long-term significance, this fund deserves serious consideration as a portfolio building block.