Many investors are scanning the investment horizon right now, trying to decipher what's coming down the road. President Donald Trump's tariffs are causing panic among many and have spurred economists to revise their recession predictions upward.
If you're looking to make a million dollars or more in the stock market, I have some news for you: It's very possible! One good way to do it is via exchange-traded funds (ETFs) -- funds that trade like stocks.
After dipping into correction territory late last week, the S&P 500 (^GSPC 1.08%) is currently down by 8.73% since mid-February, as of this writing. Recession fears are still surging, however, with close to 60% of U.S. investors feeling pessimistic about the market's six-month future, according to a mid-March survey from the American Association of Individual Investors.
VGT ETF is down 11.8% YTD but boasts a strong 19.8% average annual return over the past decade, outperforming the S&P500 by ~7% annually. VGT is well-diversified across critical tech sub-sectors like semiconductors and software, crucial for the AI era, with top holdings including Apple, Nvidia, and Microsoft. The fund has a low expense ratio (0.09%) and high liquidity ($100 billion AUM), but relatively high valuation metrics indicate it is a higher risk/reward propostion for investors.
The S&P 500 (^GSPC -1.39%) is made up of 500 companies from 11 different sectors of the U.S. economy, but the information technology sector is the largest in the index by far, representing 30.1% of its entire value.
VGT is a leading tech ETF with a competitive Sharpe ratio, even compared to the Nasdaq and other Information Technology ETFs. VGT, like the Information Technology sector, has a negative current and forward ERP, considering Treasury yields above 4%. Despite this, net inflows into the ETF remain positive, even as the market starts to see an increase in PUT options, particularly from hedge funds.
Apple, Nvidia, and Microsoft are the world's three largest companies, with a combined value of $10 trillion. Each operates in the information technology sector, which is responsible for developing the hardware and software that powers everything from the internet to personal computers.
Exchange-traded funds (ETFs) are fantastic investment vehicles that allow you to own a basket of stocks without picking them individually. ETFs also pool the funds of many investors together, allowing you to easily spread your money across many stocks even if you don't have much money to invest.
The S&P 500 has been a solid benchmark that has produced annualized double-digit returns for many years.
The S&P 500 (^GSPC -0.95%) has performed remarkably well in recent years, soaring by around 23% in 2024 alone and by more than 80% over the past five years.
The stock market has turned in some very robust returns in the past couple of years, which is starting to attract new investors. However, investing in individual stocks is not easy.
Passive investors looking to better capitalize on the AI boom may wish to consider Vanguard's more aggressive, tech-focused ETF, the Vanguard Information Technology ETF (NASDAQ:VGT).