1 Unstoppable Vanguard ETF to Buy With $605 During the S&P 500 Bull Market

In This Article:

The S&P 500 continues to set new record highs, extending the bull market that began when the index bottomed in October 2022. The technology sector is driving the rally thanks to its incredible earnings growth, led by tailwinds like artificial intelligence (AI).

The S&P 500 is weighted by market capitalization, so the largest companies in the index have a greater influence over its performance than the smallest. It's up 23.8% so far this year, crushing the 14.4% return of S&P 500 Equal Weight index (which assigns the same weighting to every company, regardless of its size).

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

The difference can be partly explained by Nvidia stock, which has soared 194% this year. Other tech giants have also made a significant contribution to the strong gain in the S&P 500: Oracle stock is up 76%, and Meta Platforms stock has gained 60%.

The AI revolution is still in the very early stages, so tech stocks will probably continue leading the S&P 500 higher. Therefore, buying an exchange-traded fund (ETF) that focuses on the tech sector can help investors beat the market. Here's why the Vanguard Information Technology ETF (NYSEMKT: VGT) might be a great choice for investors with a spare $605 (that they don't need for immediate expenses).

Gold bull and bear figurines placed on top of a smartphone with a stock trading app on the screen.
Image source: Getty Images.

Top AI hardware and software stocks rolled into a single ETF

The Vanguard Information Technology ETF holds 314 stocks from 12 different sectors of the technology industry. The semiconductor sector is the largest with a weighting of 29.7%, which isn't a surprise considering the demand for AI data center chips. Nvidia is the dominant player in that space, and it has added $3.1 trillion to its market capitalization over the past two years.

Despite holding hundreds of different stocks, the Vanguard ETF is highly concentrated. Its top three positions alone account for 44.5% of the entire value of its portfolio:

Stock

Vanguard ETF Portfolio Weighting

1. Apple

15.76%

2. Nvidia

15.40%

3. Microsoft

13.35%

Data source: Vanguard. Portfolio values are accurate as of Oct. 31, 2024, and are subject to change.

Apple recently launched its Apple Intelligence AI software for customers with the latest iPhone, iPad, and Mac devices. It offers new writing tools that allow users to summarize emails and text messages, and it can even draft content for them to send. The software was developed in partnership with OpenAI, so legacy Apple features like the Siri voice assistant are also being overhauled with the capabilities of ChatGPT. These new AI tools could drive a significant upgrade cycle for Apple's devices over the next few years.