--- title: "Why 1 Top ETF Could Be an Ultimate Long-Term Growth Investment" description: "The Vanguard Information Technology ETF (VGT) is a passively managed market-cap-weighted basket of U.S.-based tech stocks. It has a long track record of market-obliterating performance and includes to" type: "news" locale: "en" url: "https://longbridge.com/en/news/204396190.md" published_at: "2024-05-19T10:38:17.000Z" --- # Why 1 Top ETF Could Be an Ultimate Long-Term Growth Investment > The Vanguard Information Technology ETF (VGT) is a passively managed market-cap-weighted basket of U.S.-based tech stocks. It has a long track record of market-obliterating performance and includes top holdings such as Microsoft, Apple, and Nvidia. With low fees and a diverse portfolio of small-cap stocks, VGT offers potential for long-term growth. 2024 has been quite the year on Wall Street so far. After an epic emergence from the bear market, the artificial intelligence (AI) boom has investors seeking out "what's next." Remarkably, even though **Nvidia** (NASDAQ: NVDA) -- still the bellwether stock of the AI trend -- is up over 80% year to date, a few companies (like **Super Micro Computer** (NASDAQ: SMCI) and **Vertiv Holdings** (NYSE: VRT), to name just two) riding its coattails are up by even more. If you fear you've missed out, but have even greater fear (rightfully) of chasing the hottest stocks, there could be a solution. The **Vanguard Information Technology ETF** (VGT -0.24%) has a long track record of market-obliterating performance. Here's why it could still be an ultimate long-term growth investment. ## What is VGT exactly? This exchange-traded fund is a passively managed market-cap-weighted basket of U.S.-based tech stocks. In simple terms, that means there's no active management team constantly choosing which stocks to buy and sell for the **Vanguard Information Technology ETF**. Rather, all stocks that are classified as tech (as outlined by the technology index from financial data company **MSCI** upon which VGT is based) are purchased and allowed to do their thing without any tampering. As a result, the size of a business will dictate how big of a position its stock will comprise in the ETF's portfolio. The bigger the business, the bigger the allocation. As of the end of April 2024, the 10 largest tech businesses made up nearly 60% of the value of the Vanguard Information Technology ETF. **Company** **Market Cap** **% of VGT Portfolio** **Microsoft** (NASDAQ: MSFT) $3.1 trillion 17.3% **Apple** (NASDAQ: AAPL) $2.9 trillion 15.3% **Nvidia** (NASDAQ: NVDA) $2.3 trillion 11.9% **Broadcom** (NASDAQ: AVGO) $640 billion 4.4% **Salesforce** (NYSE: CRM) $269 billion 2% **AMD** (NASDAQ: AMD) $248 billion 2% **Adobe** (NASDAQ: ADBE) $213 billion 1.6% **Cisco Systems** (NASDAQ: CSCO) $198 billion 1.5% **Accenture** (NYSE: ACN) $193 billion 1.4% **Oracle** (NYSE: ORCL) $332 billion 1.4% Market cap data as of May 15, 2024. Vanguard IT ETF position % as of April 30, 2024. Data source: Vanguard and YCharts. Note that **Alphabet** (NASDAQ: GOOGL)(NASDAQ: GOOG) and **Meta Platforms** (NASDAQ: META) aren't included. They were both reclassified as "communications sector" businesses back in 2018 under the Global Industry Classification Standard (which was developed by MSCI and **Standard & Poor's**), and were therefore dropped from the tech index. Likewise, **Amazon** (NASDAQ: AMZN) and **Tesla** (NASDAQ: TSLA) are nowhere to be found in its holdings, as they are classified as "consumer discretionary" stocks. Since it's a passive fund, Vanguard only charges 0.1% in annual fees -- working out to just $1 per year in expenses deducted from fund performance for every $1,000 invested into the ETF. That has contributed to its outperformance of market indices like the **S&P 500** and **Nasdaq Composite.** Data by YCharts. ## A long tail of future market leaders Low fees, however, are not the primary reason for VGT's market-crushing investment performance. This may seem like a plain-vanilla mega-tech fund based on its top 10 holdings. However, there are actually 312 stocks in the Vanguard Information Technology ETF, including a long list of mid-cap and small-cap businesses. If you scroll to the final page of VGT's portfolio holdings, for example, you'll find three businesses with market caps well under $1 billion. One is a developer of LiDAR sensors for autonomous vehicles, one markets an AI chatbot for businesses, and the last is a semiconductor design start-up. Most of these small-caps stocks, which make up an insignificant part of the VGT portfolio, will stagnate at best. However, a small handful of them could experience explosive growth. Perhaps one or another could someday take the role of "the next Nvidia." In fact, Nvidia and some of its semiconductor peers illustrate the beauty of the strategy of having a big cluster of small stocks represented in a portfolio. A decade ago, Nvidia was a tiny part of VGT, as were Broadcom and AMD. But thanks to their massive outperformances of the market, they jumped into the fund's top 10 holdings and helped supercharge VGT's performance along the way. Data by YCharts. In the decade or so I've owned shares of the Vanguard IT ETF, my investment has done quite well. The megacap movers and shakers that dominate the portfolio today could keep this fund in growth mode for years. Meanwhile, some of those smaller businesses that are trying to innovate now could develop into the "next big thing," so those with the patience to buy and hold for years can gain exposure to those future disrupters now. I'll be happy to own shares of this ETF for the indefinite future. ### Related Stocks - [603020.CN - Apple Group](https://longbridge.com/en/quote/603020.CN.md) - [NVDA.US - NVIDIA](https://longbridge.com/en/quote/NVDA.US.md) - [AAPL.US - Apple](https://longbridge.com/en/quote/AAPL.US.md) - [VGT.US - VG Info Tech](https://longbridge.com/en/quote/VGT.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | Nvidia or Microsoft: Ken Griffin Bets Big on One Top AI Stock | Billionaire Ken Griffin, founder of Citadel, expresses skepticism about the AI boom, suggesting it is driven by hype rat | [Link](https://longbridge.com/en/news/276355020.md) | | AI Gold Rush Lets Samsung Demand Premium For HBM4 Chips | Samsung Electronics is raising prices for its next-generation High Bandwidth Memory 4 (HBM4) AI memory chip, seeking aro | [Link](https://longbridge.com/en/news/276325186.md) | | IronBridge Private Wealth LLC Has $905,000 Holdings in Apple Inc. $AAPL | IronBridge Private Wealth LLC reduced its stake in Apple Inc. (NASDAQ:AAPL) by 77.3% in Q3, holding 3,555 shares valued | [Link](https://longbridge.com/en/news/276436345.md) | | Can NVIDIA Maintain its Dominancy Amidst Rising ASIC Competition | NVIDIA faces challenges in China due to regulatory actions affecting its data-center market. Concerns about long-term ma | [Link](https://longbridge.com/en/news/276370197.md) | | Apple Inc. $AAPL Position Lifted by Rossmore Private Capital | Rossmore Private Capital increased its position in Apple Inc. (NASDAQ:AAPL) by 1.1% in Q3, owning 204,242 shares valued | [Link](https://longbridge.com/en/news/276436349.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.