If your goal is to bet on the tech titans driving stock market returns, then the Vanguard Information Technology ETF (VGT +1.56%) is one of the most economical options. It is cheap, highly liquid, has a strong track record, and is backed by a reputable provider.
However, investors should not take the ETF’s name at face value, since it's not as complete as one might expect from a technology ETF. Here’s what you need to know before investing.
What is Vanguard Information Technology ETF?
VGT is a passive ETF, meaning it does not try to pick individual stocks. Instead, it seeks to replicate the performance of its benchmark, the MSCI US Investable Market Information Technology 25/50 Index.
This index is a market cap-weighted basket of over 300 small-, mid-, and large-cap U.S. technology sector stocks. In a market-cap-weighted index, larger companies by total market value receive greater weight than smaller ones.
Vanguard Information Technology Index Fund ETF's holdings span a wide range of subindustries, including:
- Internet services and infrastructure companies, such as data centers and cloud networking and storage providers.
- Information technology consulting and services firms.
- Technology hardware and equipment manufacturers, including those producing communications equipment, computers, peripherals, electronic equipment, and related instruments.
- Semiconductor and semiconductor equipment manufacturers.
Exchange-Traded Fund (ETF)
How to invest
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Holdings
Despite holding more than 300 stocks, many of which are small- and mid-caps, Vanguard Information Technology Index Fund ETF is market cap-weighted, so the portfolio is dominated by the largest technology stocks.
It’s also missing some notable names. Amazon (AMZN +1.43%), Netflix (NFLX -1.70%), and Tesla (TSLA -3.36%) are in the consumer discretionary sector, while Alphabet (GOOGL +2.73%) and Meta Platforms (META +0.59%) are classified under communications. This means the fund is not a complete representation of the broader tech industry.
The portfolio has a strong growth tilt. On average, Vanguard Information Technology Index Fund ETF's holdings have a 40.5% return on equity and 30.3% earnings growth, but they trade at rich valuations of 39.1 times forward earnings and 7.7 times book value.
Top holdings as of August 2025:
- Nvidia (NVDA +2.26%): 16.74%
- Microsoft (MSFT +0.56%): 14.89%
- Apple (AAPL +1.25%): 13.03%
- Broadcom (AVGO +2.86%): 4.57%
- Oracle (ORCL +1.16%): 2.05%
- Palantir Technologies (PLTR +2.30%): 1.64%
- Cisco Systems (CSCO +0.51%): 1.58%
- IBM (IBM +7.88%): 1.56%
- Salesforce (CRM -0.05%): 1.47%
- Advanced Micro Devices (AMD +7.63%): 1.31%
Should I invest?
Vanguard Information Technology Index Fund ETF may appeal to investors who want straightforward exposure to the U.S. technology sector as it is formally defined by the Global Industry Classification Standard (GICS).
If your priority is owning the largest, most established tech companies alongside a broad base of smaller names, and you value Vanguard’s low costs and long track record, this ETF offers that in a single, liquid vehicle.
The portfolio’s heavy weighting toward mega-cap leaders like Nvidia, Microsoft, and Apple means your returns will closely follow the performance of these companies, which have historically driven much of the sector’s gains.
On the other hand, this fund may not suit investors who want a more expansive or thematic approach to technology. It excludes high-profile companies such as Amazon, Alphabet, Meta Platforms, Netflix, and Tesla because they are classified under other sectors, even though they are heavily involved in technology-driven businesses.
Vanguard Information Technology Index Fund ETF may also be less appealing to those seeking a more balanced allocation, as its market cap weighting tilts heavily toward the top holdings, leaving smaller and mid-sized innovators with less influence on overall performance.
Dividends
This Vanguard ETF currently pays a quarterly dividend amounting to a 0.42% 30-day SEC yield. This is normal for technology-focused ETFs that prioritize capital appreciation more than high income.
Expense ratio
This Vanguard ETF charges a 0.09% expense ratio, or around $9 per $10,000 invested per year. This is highly competitive for a sector-specific ETF and typical of Vanguard funds.
Expense Ratio
Historical performance
1-yr | 3-yr | 5-yr | 10-yr | |
Net Asset Value | 22.16% | 23.98% | 19.37% | 21.58% |
Market Price | 22.19% | 23.98% | 19.38% | 21.58% |
Related investing topics
The bottom line
Vanguard Information Technology Index Fund ETF delivers low-cost, efficient access to the U.S. technology sector with a strong track record and the backing of Vanguard’s index management expertise. Its strengths lie in simplicity, liquidity, and coverage of the dominant tech leaders that have driven much of the market’s growth.
The trade-offs are narrower exposure that omits certain high-profile, tech-adjacent companies and a top-heavy structure where a few holdings account for a large share of assets. For most investors, this makes Vanguard Information Technology Index Fund ETF better suited as a tactical tool to overweight technology rather than as a standalone core holding.
