Looking for broad exposure to the Technology - Broad segment of the equity market? You should consider the Vanguard Information Technology ETF (VGT), a passively managed exchange traded fund launched on 01/26/2004.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $42.93 billion, making it the largest ETF attempting to match the performance of the Technology - Broad segment of the equity market. VGT seeks to match the performance of the MSCI US Investable Market Information Technology 25/50 Index before fees and expenses.
The MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.86%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.
Looking at individual holdings, Apple Inc. (AAPL) accounts for about 22.58% of total assets, followed by Microsoft Corp. (MSFT) and Nvidia Corp. (NVDA).
The top 10 holdings account for about 60.10% of total assets under management.
Performance and Risk
So far this year, VGT has lost about -25.03%, and is down about -18.85% in the last one year (as of 09/08/2022). During this past 52-week period, the fund has traded between $315.97 and $466.10.
The ETF has a beta of 1.14 and standard deviation of 30.41% for the trailing three-year period, making it a medium risk choice in the space. With about 396 holdings, it effectively diversifies company-specific risk.