The S&P 500 is hitting record highs, driven by the technology sector, but experts say it’s not too late to jump in for long-term gains.
The S&P 500, which represents 500 companies across various sectors of the U.S. economy, has seen a surge in value, with technology stocks leading the charge. With a 30% weighting in the technology sector, investors have ample exposure to fast-growing stocks, particularly those involved in artificial intelligence (AI).
Since hitting a new record high in January 2024, the S&P 500 has continued its upward trajectory, boasting an impressive 18% gain so far this year. Despite these gains, experts believe there is still room for growth, as historical data shows that the index has been positive in roughly three out of every four years since 1919.
For investors looking to capitalize on this bullish market, Vanguard offers affordable exchange-traded funds (ETFs) that track the performance of the S&P 500. The Vanguard S&P 500 ETF boasts a minuscule expense ratio of just 0.03%, making it an attractive option for cost-conscious investors.
The top holdings of the Vanguard S&P 500 ETF are dominated by tech giants like Microsoft, Apple, Nvidia, Amazon, and Meta Platforms, all of which are heavily involved in the AI space. These companies have been making significant strides in AI development, positioning themselves for future growth.
On the other hand, investors seeking higher returns may consider the Vanguard S&P 500 Growth ETF, which focuses on the best-performing stocks in the S&P 500. With a heavier weighting in the technology sector, this ETF has delivered a compound annual return of 16.2% since its inception in 2010, outperforming the regular S&P 500 ETF.
While the S&P 500 Growth ETF may be more volatile due to its tech-heavy exposure, experts believe that as long as the technology sector continues to drive the market, this ETF has the potential to deliver strong long-term returns.
Overall, with the S&P 500 trading at record highs and the technology sector leading the charge, now could be an opportune time for investors to consider ETFs like those offered by Vanguard to capitalize on the current bull market and position themselves for long-term growth.
