Within the Vanguard exchange-traded fund (ETF) lineup, one fund has delivered the best performance across the past three-, five-, and 10-year timeframes — the Vanguard Information Technology ETF (NYSEMKT: VGT).
There’s no question about what’s been driving it
Momentum for tech stocks had been strong in the late 2010s, but they got another boost coming out of COVID, due to huge amounts of liquidity in the economy and ultra-low interest rates. Over the past few years, the artificial intelligence (AI) revolution has driven huge growth in revenues and earnings. That’s helped deliver an average annual return of 25.2% for shareholders of the Vanguard Information Technology ETF over the past decade.
At that rate of return, an initial investment of roughly $105,000 in this ETF 10 years ago would have gotten you to $1 million today. This would be the ideal time to remind you that past performance is not a predictor of future results. Given that the S&P 500 has returned around 10% annually over the past century, a 25% average annual return is far above the historical trend.