The Motley Foolยท2025-09-03 09:00Core Insights - The Vanguard Information Technology ETF (VGT) is positioned as a leading investment vehicle to capitalize on the AI revolution, with a low expense ratio of 0.09% [1][9] - The fund has outperformed the S&P 500 year-to-date, returning 12.1% compared to the S&P 500's 9.8% [2] - The fund's holdings include major players in the AI sector, with Nvidia, Microsoft, and Apple making up nearly half of its total assets [4] Fund Performance - As of September 1, the Vanguard Information Technology ETF has returned 12.1% year-to-date, outperforming the S&P 500 [2] - The fund has averaged a remarkable 22.4% annual return over the past decade, making it one of the best-performing ETFs globally [11] Holdings and Sector Exposure - The fund's largest holdings include Nvidia (18.2%), Microsoft (15.4%), and Apple (12.7%), reflecting concentrated exposure to key AI companies [4] - The fund encompasses 317 technology stocks, capturing the AI spillover effect across various sectors, including semiconductors, software, and hardware [5] Market Dynamics - The technology sector's dominance, representing over 30% of the S&P 500, is seen as a reflection of the ongoing AI transformation rather than a risk [6][7] - By focusing on technology, the fund avoids sectors being disrupted by AI, such as utilities and traditional banking [8] Investment Strategy - The Vanguard Information Technology ETF adopts a passive indexing approach, automatically rebalancing to include emerging AI leaders without requiring active management [9][10] - The fund is designed to capture the entire technology ecosystem that supports AI development, ensuring exposure to both current and future leaders in the space [13]