Vanguard Information Technology ETF offers low-cost access to 300+ tech companies, but concentration in top three stocks limits diversification benefits.

The Vanguard Information Technology ETF (VGT) holds more than 300 technology companies with an expense ratio of 0.09%, which works out to about $9 a year on every $10,000 invested. Vanguard recently split the fund 8-for-1 effective in late April, dropping the share price to near $115.

Despite holding hundreds of stocks, the fund is weighted by market value, meaning the largest companies dominate: as of the end of March, Nvidia made up about 19% of the fund, Apple about 16%, and Microsoft about 10%, with those three names together accounting for nearly 45% of the entire portfolio and the top ten holdings making up close to 60%.

Over the past decade, the fund has delivered an annualized return north of 24%, but it does not shield investors from sector-wide downturns—early June pressure on chip stocks rippled straight through most of the fund's largest positions. The fund removes the risk of picking the wrong individual AI stock but not the risk of the AI trade as a whole.