Tech Diversifiers: Vanguard Information Technology ETF Vs ARKK YTD

In the world of tech investing, ETFs outside of ARKK often have to settle for second fiddle when it comes to media exposure. With Cathie Woods' fund down almost 17% in 2024, we take a look at how the Vanguard Information Technology ETF (NYSEMKT: VGT) stacks up against ARKK, and the Nasdaq100.

The Vanguard Information Technology ETF is up there in the tech-focused exchange-traded funds arena, and rightly so. With top holdings that include industry heavyweights like Microsoft, Apple, and Broadcom, along with Nvidia, this ETF offers investors exposure to the tech sector's potential without tying their fortunes to the performance of a single company.

This formidable ETF is designed to track the MSCI US Investable Market Index/Information Technology 25/50 Index. It achieves this with an ultra-low expense ratio of 0.1%, which is a draw for cost-conscious investors looking to maximise their returns while keeping overhead to a minimum.

But Vanguard’s ETF is not just about capital appreciation— it also caters to those seeking income. With a dividend yield of 0.7%, it surpasses Nvidia's yield of 0.2%, offering a more appealing option for investors interested in the tech sector who also want to enjoy a regular stream of income.

The Vanguard Information Technology ETF can be the cornerstone of an investment strategy, suitable for a wide array of investors seeking broad exposure to tech stocks without putting all their eggs in one basket. Its diversified portfolio potentially reduces volatility compared to holding individual tech stocks.

However, savvy investors should consider the ETF's structure before taking the plunge. With significant weight given to giants like Apple, Microsoft, and Nvidia, those with outsised exposure to these stocks already may find the ETF less suitable. It's important to strike the right balance to avoid overconcentration in certain companies.

Comparing Performance In Tech

Whilst ARRK, the NDX (Nasdaq100), and VGT took similar dips to close out the week, over the course of 2024 there is quite a significant difference. ARRK has dropped 16.83% through the year so far, whilst the VGT has added 1.83%. Standing out front with 2.98% growth in 2024 is the NDX, with the main index showing that not all market periods play to the strengths of stock pickers or fund managers.

The Vanguard Information Technology ETF stands out as a strong option for a diversified fund in the technology sector but you should always take a look under the hood at the constituents before deciding whether these match up with your own ideology. Diversification in a growth sector like tech is a good idea, so take a look around, and if you feel like really diversifying, maybe a few funds may tick the right boxes.