Two moons ago1, I penned a missive extolling the virtues of the Vanguard Information Technology ETF (VGT). Since then, the winds of artificial intelligence have risen with the fury of a storm in the mountains of innovation. This fund, like a particularly clever dragon, has hoarded nearly every coin minted in the realm of silicon and code.
By the first of September, VGT had returned 12.1% year to date2, outpacing the S&P 500‘s 9.8% by a margin that would make a Discworld tortoise blush. Yet this is but the shadow of a greater truth: this ETF holds the keys to the kingdom of AI, where the gates are guarded by three titanic gnomes3.
The AI Winners You Already Own
Peer into the vaults of this fund, and you’ll find a rogues’ gallery of AI luminaries. Nvidia (NVDA), the blacksmith of the GPU forge, holds 18.2% of the treasure. Microsoft, with its cloud empires and copilot sorcery, commands 15.4%. Apple, that secretive orchard of sleek devices, guards 12.7%. Together, they form a triumvirate of innovation, their combined holdings a veritable dragon’s hoard.
But the true alchemy lies in the spillover effect. Broadcom (AVGO) crafts custom chips for the hyperscaler guilds. AMD duels Nvidia in the arena of GPU supremacy. Oracle, that ancient library of databases, rewrites its tomes for the AI age. Salesforce embeds AI agents into the fabric of commerce. With 317 holdings4, this fund is less an ETF and more a mobile library of technological wizardry.
Why Sector Concentration Works
Critics, those Luddites in velvet, cry about concentration risk as if the Discworld’s economy were built on the stability of a teetering stack of cheese wheels. They fail to grasp the fundamental truth: software is devouring the world, and AI is the dragon’s fire in its belly5.
Consider what lies beyond the fund’s borders: the Utility Guild peddling dividends like alchemical promises, while AI companies brew growth elixirs. The Bankers’ Circle, shackled by red tape, watch fintech disruptors dance in their shadows. Retailers, those relics of the pre-digital age, squabble over margins thinner than a Discworld coin. By investing in technology, you’re not merely holding stocks-you’re owning the future while the past burns.
The 0.09% expense ratio is but a small toll for crossing the Bridge of Progress. Vanguard’s indexing ritual ensures your portfolio rebalances itself like a self-correcting compass, adding rising stars without the need for mortal intervention. When the next Nvidia emerges from the fog of innovation, it will slither into your portfolio unbidden.
The Patient Investor’s AI Strategy
Wall Street’s obsession with “the next Nvidia” is as futile as a witch trying to count the stars. Even the Unseen University of Coders struggles to predict which startups will become titans. VGT takes a simpler path: own them all and let the market play its ancient game of musical chairs.
Today’s AI champions-Microsoft, Nvidia-drive the chariot of returns. Tomorrow’s heroes, perhaps TSMC with its edge-computing magic or Micron solving memory’s riddles-are already in your portfolio. Over the past decade, this fund has averaged 22.4% annual returns6, making it a dragon in the realm of ETFs.
The Technology Sector Is the AI Trade
Six months from now, this fund will likely hold new AI titans yet to be born-startups emerging from the primordial ooze of innovation. Companies going public, spinning off, or simply “breaking out” will join the portfolio like apprentices joining a guild. This is the hidden alchemy of indexing: automatic inclusion of the next generation of wizards.
The AI revolution will not be won by a single company. It will be won by the entire ecosystem working in harmony-chips feeding models, models powering software, software driving demand for more chips. This Vanguard fund owns the entire virtuous cycle, making it the Discworld’s answer to the AI superbuild. And remember, dear reader: the only thing more certain than the rise of AI is the fall of those who fail to invest in it. 🤖
1 In Discworld terms, this is approximately 28 days, though time is a relative concept near the edge of the Disc.
2 As measured by the Luggage of Financial Data, which never stops, never sleeps, and is not haunted.
3 Gnomes in this context refer to both literal subterranean gnomes and metaphorical corporate titans.
4 317 is also the number of times the Discworld has been destroyed and rebuilt. Coincidence? Probably not.
5 Software is the new dragon, and AI is the fire it breathes. Proceed with caution.
6 Past performance is not a predictor of future results, nor is it a guarantee that the Discworld won’t collapse tomorrow.
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2025-09-03 12:40