Investors seeking comprehensive exposure to the dynamic U.S. technology sector often turn to the Vanguard Information Technology ETF (VGT). This fund tracks the innovative and capital-intensive areas of artificial intelligence and cloud infrastructure. However, a closer examination of its portfolio construction reveals a significant reliance on a handful of mega-cap stocks, raising questions about diversification and risk.
Performance Metrics and Fund Profile
As of December 11, 2025, the ETF has delivered a robust year-to-date return of +25.29%. Recent performance data, however, illustrates the sector’s inherent volatility:
* Over a three-month period, the fund gained 9.1%.
* It has retreated 2.61% in the past month.
* The one-week performance shows a decline of 1.83%.
With assets under management (AUM) of approximately $115.9 billion, VGT is a highly liquid vehicle. Its average daily trading volume exceeds $200 million, facilitating tight bid-ask spreads and ease of entry and exit for investors. The fund’s expense ratio is a competitive 0.10%.
A Deep Dive into Portfolio Holdings
VGT seeks to replicate the performance of the MSCI US Investable Market Information Technology 25/50 Index and holds 316 securities in total. Despite this broad number of holdings, the fund’s weighting is intensely concentrated in its largest positions. The top ten holdings account for a substantial portion of the portfolio, creating a notable concentration risk where the ETF’s fortunes are closely tied to a select few companies.
A geographical analysis shows the fund is overwhelmingly focused on the United States, with 96.4% of its assets allocated domestically. The top holdings are dominated by industry giants:
* NVIDIA holds the largest position at 18.18% of the fund, a direct beneficiary of the expanding artificial intelligence ecosystem.
* Apple (14.29%) and Microsoft (12.93%) follow, meaning these three companies alone constitute over 45% of the ETF’s total weight.
* Other significant allocations include Broadcom (4.48%), Palantir Technologies (2.09%), Oracle (2.05%), and Advanced Micro Devices (AMD) (1.97%).
Competitive Landscape: How VGT Stacks Up
VGT operates in a space with several prominent competitors, primarily the SPDR Technology Select Sector ETF (XLK) and the Fidelity MSCI Information Technology Index ETF (FTEC). A comparison highlights key differences in strategy.
| Feature | Vanguard VGT | SPDR XLK | Fidelity FTEC |
|---|---|---|---|
| Number of Holdings | 316 | Fewer holdings | Similar to VGT |
| Top 3 Concentration | Very High (NVDA, AAPL, MSFT) | High, but with different weightings | High, similar to VGT |
| Expense Ratio | 0.10% | 0.10% | 0.084% |
While all three funds offer low-cost access to the tech sector, their portfolio compositions vary. XLK typically holds fewer stocks and has historically given a greater weight to Apple. VGT, though broader in its number of holdings, is distinguished by its exceptionally heavy allocation to NVIDIA.
The future trajectory of the Vanguard Information Technology ETF will likely be governed by two interconnected factors: the ongoing volatility within the technology sector and the performance of its dominant mega-cap holdings.
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