If you’re not sure where to invest in the stock market, consider holding an exchange-traded fund (ETF) in your portfolio. Doing this can dramatically simplify your decision-making process. ETFs hold dozens, hundreds, and sometimes even thousands of stocks. They can provide you with excellent exposure through just a single investment. Vanguard funds in particular are popular choices because of their low costs and solid stock selection.
In some cases, you can also earn significant returns by investing in ETFs. An exceptional example is the Vanguard Information Technology Index Fund ETF (NYSEMKT: VGT)which has delivered significant returns for investors over the past decade. Can it still be a good investment today?
The Vanguard Information Technology ETF is up 620% in ten years
A big reason why the Vanguard Information Technology fund has been a phenomenal investment over the past decade is because it focuses on top technology stocks, including big names like Apple, MicrosoftAnd Nvidia — three companies that are capitalizing on the excitement about artificial intelligence (AI) in recent years. Together, these three stocks account for 44% of the fund’s total weight. There are a total of 316 shares in the ETF.
If we include the ETF’s dividend (which yields a modest 0.6%), the total return over the past ten years is approximately 620%. That means a $25,000 investment in the fund would be worth about $180,000 today. For comparison, if you were to make an investment of the same size that the S&P500it would be worth significantly less today, totaling about $94,000.
Why the fund can still rise higher
Although the ETF has performed over the past decade, there is still a bullish case for investors considering the fund, which is due to the potential of AI.
Research company Gartner projects that AI chip sales will reach at least $119 billion by 2027, more than double last year’s $53 billion. That’s good news for Nvidia and other chipmakers, because it suggests demand will remain strong. The overall AI market also looks promising. Analysts at Fortune Business Insights estimate that the global economy will grow at a compound annual growth rate of 20.4% through 2032.
While the Vanguard fund is not exclusively an AI fund, technology stocks as a whole will benefit from companies building AI models and related products and services. Businesses will invest in new AI technologies, and they will need to upgrade their existing IT infrastructure to ensure they have the capabilities to handle the additional workload. Many tech companies are at least indirectly involved in AI in some way, even if they are not creating AI-specific products and services.
Should you invest in the Vanguard Information Technology ETF?
The Vanguard Information Technology ETF has a modest expense ratio of 0.10% and offers investors a great way to gain exposure to the world’s best technology stocks.
Given the rising valuations in technology, investors may feel uncomfortable investing in this type of fund. But while a correction may be on the way for some highly priced tech stocks in the near future, the long-term trajectory still looks promising. For the most part, technology has been a great option for long-term investors, and it has allowed investors to generate incredible returns along the way.
As long as you plan to stay invested for years to come, this Vanguard fund can be a great investment to keep in your portfolio.
Should you invest $1,000 in the Vanguard World Fund – Vanguard Information Technology ETF now?
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David Jagielski has no position in the stocks mentioned. The Motley Fool holds positions in and recommends Apple, Microsoft and Nvidia. The Motley Fool recommends Gartner and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
This Vanguard ETF has generated a return of 620% in 10 years. Is it still a buy? was originally published by The Motley Fool
