4 Reasons to Buy This ETF Like There's No Tomorrow

The recent downswing in tech stocks has given investors a great opportunity to start or add to positions in the Vanguard Information Technology ETF (NYSEMKT: VGT) . The exchange-traded fund (ETF) attempts to mimic the performance of the MSCI U.S. Investable Market Information Technology 25/50 index, which consists of technology stocks involved in everything from semiconductors to smartphones to software.

Let's look at four reasons why investors should be buying this ETF like there's no tomorrow.

1. A history of great returns

Technology has been the best-performing sector within the S&P 500 over the past decade by a wide margin. The sector's performance has outpaced the returns of the next closest sector, consumer discretionary, by more than 8% a year during that stretch.

Given its ties to the technology sector, the Vanguard Information Technology ETF has posted robust results over the past 10 years. During that time, it has generated an average annual return of 20.6%, through the end of July. On a cumulative basis, that's a return of over 550%. A $10,000 investment made 10 years ago would now be worth over $65,000.

Returns have been even stronger more recently, with an annual average return of 22.1% over the last five years and 25.9% over the past year. While past performance isn't an indication of future performance, that's still an impressive track record over a long period.

2. Low costs

High expense ratios on ETFs and other funds can eat into the long-term returns of investments. That's why it's advantageous to find ETFs with low expense ratios.

The Vanguard Information Technology ETF, fortunately, has a very low expense ratio of 0.10%. For every $10,000 investors have in the ETF, they're only paying the fund $10. This means that investors get to keep virtually all the returns the underlying index produces.

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3. Exposure to leading AI companies

This Vanguard ETF is heavily weighted toward its top three holdings: Microsoft , Apple , and Nvidia . Combined, the three tech titans make up over 47% of its portfolio.

All three companies have the potential to be among the biggest long-term beneficiaries of artificial intelligence (AI) . In addition, the ETF's top 10 also features a number of other potential AI winners, including Broadcom , Advanced Micro Devices , Adobe , and Salesforce .

All of these stocks give investors multiple ways to win with AI. On the chip side, Nvidia is leading the way with its market-leading graphic processing units (GPUs) helping form the backbone of the AI infrastructure buildout. However, AMD is well-positioned as a solid second player in the GPU space, while Broadcom has been benefiting by providing switches and ethernet solutions used in GPU deployments.

Microsoft is a play on the cloud computing and software side of AI. Its cloud computing business Azure has been growing quickly as it helps customers build their own AI applications using its platform. Meanwhile, it's also seeing solid growth in its software platforms as it incorporates AI features into them. Adobe, for its part, has been another software company that's been at the forefront of incorporating AI into its suite of products, as has Salesforce, with its Einstein Copilot and new Data Cloud offerings.

Apple is a potential play on a hardware upgrade cycle that will be needed to run all the latest and great AI features on the consumer end. The company has also come out with its own AI features to run on its new Apple Intelligence platform that will be incorporated into the operating systems of its devices.

All in all, the Vanguard ETF has investors covered in nearly all the aspects of investing in AI.

4. The ETF is off its highs

While the Vanguard Information Technology ETF has been a strong performer over the years, investors can buy the ETF well off its recent high of $609.15, which it hit on July 15. That's more than 9% below the ETF's 52-week high price.

For investors with a long time horizon, this is a great investment to buy and then dollar-cost average into over time by putting money into it each month.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Advanced Micro Devices, Apple, Microsoft, Nvidia, and Salesforce. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .