The tech sector is booming with innovation, especially in artificial intelligence (AI), making it an exciting time for investors to get involved. One way to benefit from this trend is by investing in tech stocks like Nvidia or Amazon, or by finding emerging tech companies that could be the next big thing. Another approach is to invest in tech-focused exchange-traded funds (ETFs), like the Vanguard Information Technology ETF.
The Vanguard Information Technology ETF offers steady and strong growth with low risk, as it is well diversified and passively managed to match an index. With 314 stocks in its portfolio, this ETF provides exposure to a variety of companies in the tech sector, with a focus on large-, medium-, and small-cap stocks. Over the past five years, the fund has delivered strong gains, outperforming other similar ETFs with an annualized five-year gain of 22%.
On the other hand, the ARK Innovation ETF, managed by Cathie Wood’s ARK Invest, focuses on disruptive tech stocks but lacks diversification. With only 34 stocks in its portfolio, this ETF is considered high-risk, with Tesla and Coinbase Global accounting for a significant portion of the total. While Cathie Wood has made some early calls on successful stocks, the ARK Innovation ETF has not performed as well as the Vanguard Tech ETF over the past five years.
Overall, investors looking to maximize gains while keeping risk low may find the Vanguard Information Technology ETF to be a better choice than the ARK Innovation ETF, as it offers a more balanced and diversified approach to investing in the tech sector.
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