Vanguard ETF heavily invests in top tech companies

The Vanguard Mega Cap Growth ETF has become popular due to its strong focus on leading tech companies. A large part of its investments, 43.2%, is in four major companies: Nvidia, Amazon, Apple, and Microsoft. These companies have driven impressive gains in the S&P 500 over the past two years, coinciding with a boom in artificial intelligence (AI). Since 2023, stocks like Nvidia, Amazon, Apple, and Microsoft have shown average gains of 106% and 64% in 2024. This performance has highlighted the importance of these companies in the ETF market. The Vanguard ETF contains 69 stocks, with nearly 60% of its value coming from the tech sector alone. The ETF consists of significant holdings, including Apple with 13.92%, Microsoft at 11.14%, Nvidia at 10.93%, and Amazon at 7.24%. These companies are not only creating new AI products but also enhancing existing ones. For example, Apple recently introduced its Apple Intelligence software, which aids in managing tasks on its devices. Vanguard's ETF has outperformed the average S&P 500 return since its launch in 2007, showing a compound annual return of 13.1%. This difference in performance underscores the potential for greater gains over time. However, due to the concentrated nature of the ETF, investors are advised to maintain a diversified portfolio to manage risk effectively. In summary, while the Vanguard Mega Cap Growth ETF offers strong growth potential, especially with its focus on tech giants leading the AI boom, it is essential for investors to balance their investments for long-term stability.