This Once-Unstoppable Low-Cost Vanguard ETF Is Underperforming the S&P 500 in 2025. Here's Why It's a Buy Now.

Core Viewpoint - Technology stocks, including Nvidia, Apple, and Microsoft, have significantly increased in value over the past decade, contributing to the S&P 500's growth, but have underperformed year to date, impacting the broader market due to tech's over 30% weight in the index [1]. Group 1: Technology Sector Performance - The consumer discretionary sector, led by Amazon and Tesla, has also experienced significant declines year to date, with Alphabet down over 10% [2]. - Despite the downturn in major tech stocks, the Vanguard Mega Cap Growth ETF has only decreased by 1.5% year to date, benefiting from gains in other sectors like healthcare and financials [8][9]. Group 2: Vanguard Mega Cap Growth ETF - The Vanguard Mega Cap Growth ETF has shown a remarkable increase of 363% from the start of 2015 to the end of 2024, outperforming the S&P 500 [4]. - The ETF is highly concentrated, with 65.4% of its investments in its top 10 holdings, which include major tech companies [5]. - The ETF's top holdings include Apple (13.2%), Microsoft (11.3%), and Nvidia (10.2%), indicating a significant focus on these growth stocks compared to the Vanguard S&P 500 ETF [6][7]. Group 3: Investment Strategy - The Vanguard Mega Cap Growth ETF offers a low expense ratio of 0.07%, making it an attractive option for investors looking to gain exposure to large-cap growth stocks [3]. - The ETF allows for diversification across various sectors, including software, hardware, and healthcare, without the need to build individual investment theses for specific companies [12]. - Investors should consider existing holdings in their portfolios to avoid redundancy when investing in the ETF, particularly with high-weighted stocks like Apple [13].