1 Technology ETF to Buy With $1,000 and Hold Forever

Because it's viewed as a bellwether of how the overall stock market is doing, the S&P 500 is closely watched by investors. Unsurprisingly, many exchange-traded funds (ETF) track the performance of the index.

But for investors who want exposure to a valuable part of the economy, maybe it's time to narrow the focus. For example, consider the Vanguard Information Technology ETF (NYSEMKT: VGT) . A $1,000 contribution to this vehicle could be a smart financial move over the long term.

Tech exposure

The S&P 500 contains 11 different sectors. But as the name suggests, the Vanguard IT ETF gives investors specific exposure to the information technology sector of the economy. Investors need to dive a bit deeper to know what they're buying.

The ETF has 318 different stocks. On the surface, it might seem like there's broad diversification. However, that's not necessarily the case. The top three positions are Apple , Microsoft , and Nvidia; combined, they make up over 47% of the entire portfolio. As these businesses and stocks perform well, so does the Vanguard IT ETF.

It's worth pointing out which businesses aren't included. For example, other " Magnificent Seven " stocks like Amazon , Alphabet , Meta Platforms , and Tesla aren't in the Vanguard IT ETF. There's no doubt that these companies can be considered to have close ties to technology and innovation, but they're officially classified in other sectors.

Impressive returns

The Vanguard IT ETF has done a great job of taking care of its owners. In the past decade, the fund has produced a total return of 534%. A $1,000 investment back then would be worth more than $6,300 today, translating to a superb 20.3% annualized gain. The S&P 500, on the other hand, has generated a total return of 237% during the same period.

I believe some important factors have propelled the Vanguard IT ETF over the years. Its three top positions (Apple, Microsoft, and Nvidia) benefit from numerous powerful secular trends, like digital advertising, digital payments, cloud computing, and artificial intelligence. Moreover, these businesses dominate their respective industries, have a relentless focus on innovation, and possess wide economic moats .

On the one hand, investors might view owning these kinds of stocks as a risky endeavor. After all, it's hard to predict how technology will change the economy over the next five or 10 years.

But on the other hand, technology is exactly what moves the world forward. And by having exposure to these types of companies, investors are sure to gain from their success.

Low cost

Performance is one key factor that can't be ignored, but the cost is also critical. This ETF's expense ratio of 0.10% is very low. For every $1,000 invested, only $1 goes toward the fee. That means you get to keep more of your money over time.

Besides the visible aspect of low fees, the Vanguard IT ETF is also a low-maintenance investment vehicle. Investors don't need the time or stock-picking skills to choose individual businesses to own. Instead, you can essentially adopt an automatic dollar-cost average strategy for many years and decades.

Given its impressive track record, there's a chance this ETF will continue rewarding investors over the long haul. It makes for an excellent tech-focused option to invest $1,000 in.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool 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 .