Evidence and analysis
Vanguard Information Technology ETF (VGT)
The Vanguard Information Technology ETF (VGT) provides diversified exposure to the U.S. information technology sector. It tracks the MSCI US IMI Info Technology 25/50 Index, covering software, semiconductors, hardware, IT services, and communications equipment companies.
On March 24, 2026, Vanguard announced an 8:1 share split effective April 21, 2026. Historical share price data was not adjusted for the split.
Key Facts
| Field | Value |
|---|---|
| Ticker | VGT |
| Issuer | Vanguard |
| Inception Date | January 26, 2004 |
| Expense Ratio | 0.09% |
| Benchmark | MSCI US IMI Info Technology 25/50 Index |
| Asset Class | Domestic Stock — Sector-Specific |
| Category | Technology |
| AUM | ~$147.3B |
| AUM (Share Class) | ~$147.3B |
| 30-Day SEC Yield | 0.29% |
| Dividend Frequency | Quarterly |
| Structure | Open-End ETF |
Data as of 05/31/2026 from Vanguard. Expense ratio as of 12/19/2025.
Latest Market Data
| Metric | Current value |
|---|---|
| Product type | ETF |
| Regular market price (USD) | $122.56 |
| Market-price date | 2026-08-14 (US Eastern Time) |
| 52-week range (USD) | $83.09 – $126.00 |
| 1-year adjusted-close return | +40.68% |
| Annualised daily volatility (1 year) | 24.57% |
Source: Yahoo Finance, retrieved 15 August 2026. The regular market price is an exchange-market price and is not the fund NAV. The one-year return is calculated from the first to the last adjusted close in the retrieved one-year daily series; annualised volatility is the sample standard deviation of daily log returns multiplied by √252.
Portfolio Characteristics
As of 05/31/2026:
| Fundamental Metric | VGT | Benchmark |
|---|---|---|
| Number of Holdings | 323 | |
| Median Market Cap | $1.1T | $1.1T |
| P/E Ratio | 38.4x | 38.4x |
| P/B Ratio | 11.0x | 11.0x |
| Earnings Growth Rate | 33.3% | 33.3% |
| Return on Equity | 40.7% | 40.7% |
| Turnover Rate (FYE 08/31/2025) | 7.8% | — |
| Foreign Holdings | 0.0% | — |
VGT holds 323 stocks with a massive $1.1 trillion median market cap, reflecting its heavy concentration in mega-cap technology companies. The P/E ratio of 38.4x underscores the growth premium investors assign to the tech sector. The fund’s 33.3% earnings growth rate and 40.7% return on equity highlight the exceptional profitability of its underlying holdings.
Top 10 Holdings
As of 05/31/2026:
| # | Holding | Ticker | Weight |
|---|---|---|---|
| 1 | NVIDIA Corp. | NVDA | 16.78% |
| 2 | Apple Inc. | AAPL | 15.26% |
| 3 | Microsoft Corp. | MSFT | 9.87% |
| 4 | Broadcom Inc. | AVGO | 4.49% |
| 5 | Micron Technology Inc. | MU | 4.19% |
| 6 | Advanced Micro Devices Inc. | AMD | 3.20% |
| 7 | Intel Corp. | INTC | 1.95% |
| 8 | Cisco Systems Inc. | CSCO | 1.85% |
| 9 | Lam Research Corp. | LRCX | 1.55% |
| 10 | Oracle Corp. | ORCL | 1.45% |
NVIDIA and Apple alone account for 32.04% of the fund’s assets, making VGT highly concentrated in its top holdings. The dominance of semiconductors (NVDA, AVGO, MU, AMD, LRCX — 5 of the top 10) reflects the AI-driven semiconductor boom that has reshaped the tech landscape.
Sector Allocation
| Sector | Weight |
|---|---|
| Technology | 98.5% |
| Communication Services | 0.6% |
| Financial Services | 0.5% |
| Industrials | 0.3% |
| Consumer Cyclical | 0.1% |
Industry Exposure
As of 05/31/2026:
| Industry | Weight |
|---|---|
| Semiconductors | 37.9% |
| Technology Hardware, Storage & Peripherals | 19.6% |
| Systems Software | 14.9% |
| Application Software | 9.1% |
| Communications Equipment | 4.1% |
| Semiconductor Materials & Equipment | 5.6% |
| Electronic Components | 2.0% |
| IT Consulting & Other Services | 2.0% |
| Internet Services & Infrastructure | 1.7% |
| Electronic Equipment & Instruments | 1.3% |
| Electronic Manufacturing Services | 1.3% |
| Technology Distributors | 0.5% |
The semiconductor industry dominates at nearly 38% of the portfolio, a sharp increase driven by NVIDIA’s massive weighting. Hardware and software each account for roughly 20% and 24% respectively. This mix makes VGT highly correlated with AI infrastructure spending, data centre expansion, and chip demand cycles.
Historical Performance
Annual Returns (NAV)
| Year | Return (%) |
|---|---|
| 2026 YTD | +27.22% |
| 2025 | +21.78% |
| 2024 | +29.27% |
| 2023 | +52.67% |
| 2022 | -29.67% |
| 2021 | +30.38% |
| 2020 | +45.94% |
| 2019 | +48.68% |
| 2018 | +2.52% |
| 2017 | +37.07% |
| 2016 | +13.73% |
Average Annual Returns (as of 06/30/2026)
| Period | VGT (Market Price) | VGT (NAV) |
|---|---|---|
| YTD | +27.13% | +27.22% |
| 1 Year | +44.80% | +44.93% |
| 3 Year | +30.03% | +30.04% |
| 5 Year | +19.90% | +19.92% |
| 10 Year | +25.59% | +25.60% |
| Since Inception (01/26/2004) | +14.95% | +14.95% |
VGT has delivered extraordinary long-term returns, with a 10-year annualised return of 25.6% — far outpacing the broader market. The fund suffered a severe -29.67% drawdown in 2022 during the Fed’s rate hiking cycle but has since staged an aggressive recovery, with 2023 (+52.67%), 2024 (+29.27%), and 2025 (+21.78%) delivering consecutive years of strong gains. 2026 YTD is already +27.22%, driven by continued AI momentum.
Risk & Volatility
Historical Volatility Measures (as of 05/31/2026)
| Benchmark | R-Squared | Beta |
|---|---|---|
| Information Technology Spliced Index | 1.00 | 1.00 |
| Dow Jones U.S. Total Stock Market Index | 0.76 | 1.38 |
VGT exhibits a beta of 1.38 against the broad U.S. stock market, confirming its heightened volatility relative to the overall market. Its R-squared of 0.76 indicates that ~76% of VGT’s price movements can be explained by broad market movements, while the remainder is driven by tech-specific factors.
Key Risk Factors
- Concentration Risk — NVIDIA (16.78%) and Apple (15.26%) alone represent nearly one-third of the fund. A downturn in either stock would significantly impact VGT’s performance.
- Semiconductor Cyclicality — Nearly 48% of the portfolio is in semiconductors and related equipment, making VGT highly sensitive to chip demand cycles, inventory corrections, and geopolitical tensions affecting the supply chain.
- Valuation Risk — The P/E ratio of 38.4x is elevated relative to historical averages, leaving the fund vulnerable to multiple compression if interest rates remain high or growth expectations moderate.
- Market Volatility — Tech stocks tend to be more volatile than the broader market, reacting sharply to economic data, Fed policy changes, and earnings surprises.
- Regulatory Risk — Antitrust scrutiny, export controls on semiconductor technology, and AI regulation could create headwinds for major holdings.
Investment Outlook
Short-Term (0–12 Months)
- AI-driven capital expenditure by hyperscalers (Microsoft, Amazon, Google) continues to fuel demand for NVIDIA GPUs and data centre infrastructure.
- The Fed’s rate trajectory remains a key swing factor — rate cuts could further boost tech valuations, while persistent inflation would create headwinds.
- Semiconductor inventory cycles and geopolitical risks (China/Taiwan tensions) warrant monitoring.
Medium to Long-Term (1–5 Years)
- AI Infrastructure Buildout: Enterprise AI adoption is still in early innings, supporting sustained demand for semiconductors, cloud services, and software.
- Semiconductor Megacycle: The shift toward AI-optimised chips, edge computing, and 5G/6G networks provides a multi-year growth runway.
- Valuation Normalisation Risk: Elevated P/E multiples could compress if AI monetisation takes longer than expected or if competition erodes margins for key holdings.
Recommendation
| Investor Profile | Recommendation |
|---|---|
| Aggressive growth (10+ year horizon) | Buy — core sector holding for tech-heavy portfolios |
| Moderate / diversified investors | Hold / tactical allocation — limit to 5–15% of equity portfolio |
| Income-focused investors | Avoid — 0.29% SEC yield is among the lowest across sectors |
| Short-term traders | Trade the momentum — high beta creates ample tactical opportunities |
Conclusion
VGT remains the premier vehicle for passive exposure to the U.S. information technology sector. With a rock-bottom 0.09% expense ratio, $170.1B in assets, and a portfolio overwhelmingly tilted toward semiconductors and mega-cap tech, it offers pure-play tech exposure unmatched by active managers at a fraction of the cost.
However, VGT’s extreme concentration — 32% in NVIDIA and Apple alone, 48% in semiconductors — means investors must be comfortable with significant sector-specific risk. The fund’s beta of 1.38 against the broad market means it will amplify both bull and bear moves.
For aggressive long-term investors who believe the AI and semiconductor megacycle has years left to run, VGT is a compelling core holding. For more conservative portfolios, it serves best as a tactical satellite allocation sized to match one’s conviction in tech’s continued outperformance.
Data sourced from Vanguard (investor.vanguard.com) as of June 2026. Past performance does not guarantee future results.