Nvidia (NVDA -1.97%) has followed up its incredible 2023 performance with another year-to-date gain of 180% at the time of writing. Nvidia’s earnings continue to impress, and there are expectations for even more growth in 2025.
However, some investors may be concerned about Nvidia’s growth rate, its valuation, or competition that is taking and eating away at Nvidia’s margins.
Exchange-traded funds (ETFs) that hold Nvidia are excellent ways to gain exposure to the company while maintaining diversification. Investment management firm Vanguard offers more than 85 ETFs, many of which hold Nvidia stock.
Here are the seven Vanguard ETFs with the most exposure to Nvidia and a brief breakdown of each so you can determine if any of them are right for you.
Image source: Getty Images.
Big bet on Nvidia
Nvidia is now the second most valuable company in the world, behind Apple. Due to its size, Nvidia now constitutes a commanding part of the S&P 500. When an investor puts $1,000 into an S&P 500 index fund, they are actually buying nearly $70 in Nvidia stock and $930 in the rest of the market.
U Vanguard S&P 500 ETF (VOO -0.08%) it has a 6.8% weighting in Nvidia and the lowest expense ratio of any Vanguard ETF at just 0.03%, or $0.30 for every $1,000 invested. There are six Vanguard ETFs with even more exposure to Nvidia.
|
ETF |
Nvidia % of Fund |
Holdings |
Expense ratio |
|---|---|---|---|
|
Vanguard Information Technology ETF (VGT -1.10%) |
15.4% |
314 |
0.1% |
|
Vanguard Mega Cap Growth ETF (MGK 0.22%) |
12.5% |
71 |
0.07% |
|
Vanguard S&P 500 Growth ETF (VOOG 0.06%) |
11.9% |
234 |
0.1% |
|
Vanguard Russell 1000 Growth ETF (VONG -0.04%) |
11.3% |
394 |
0.08% |
|
Vanguard Growth ETF (VUG 0.17%) |
10.9% |
182 |
0.04% |
|
Vanguard Mega Cap ETF (MGC -0.01%) |
7.8% |
194 |
0.07% |
|
Vanguard S&P 500 ETF |
6.8% |
504 |
0.03% |
Data source: Vanguard.
The Vanguard Information Technology ETF reflects the performance of the technology sector. Since Nvidia is a technical stock, it makes sense that it makes up such a large percentage of this ETF. In fact, Apple, Nvidia, and Microsoft combined they make up a staggering 44.5% of ETFs. While some investors may jump to Vanguard’s Information Technology ETF to maximize their Nvidia exposure, there are plenty of benefits to the other ETFs on this list that could make them even better buys.
A premium on each ETF
The biggest disadvantage of the Vanguard Information Technology ETF is that it does not include companies that are not in the technology sector. For example, Amazon and Tesla are in the consumer discretionary sector. Alphabet, Meta Platformsand Netflix I am in the communications sector.
The Vanguard Mega Cap Growth ETF is a better buy than the Vanguard Information Technology ETF if you want high exposure to Nvidia and other megacap growth stocks. The fund has 65.5% of its shares in just 10 stocks. Concentration is a double-edged sword because the bottom line is basically boom or bust based on a handful of names. However, if you believe in the long-term growth of today’s top companies and have the patience to endure volatility, it might still be worth buying now.
The other ETFs on this list are not sector-based, so they include all major growth stocks. The key difference between the funds is their diversification and concentration in the biggest names.
The Vanguard S&P 500 Growth ETF is very similar to the Vanguard Mega Cap Growth ETF, only with more diversification and more holdings. It has 61.8% of its allocation in the top 10 holdings.
The Vanguard Russell 1000 Growth ETF has even more holdings because it filters growth stocks from the Russell 1000 index instead of the S & P 500. However, it is still very focused on its largest holdings, with 61.2% of the fund in just 10 stocks.
The Vanguard Growth ETF has an expense ratio almost as low as the Vanguard S&P 500 ETF and a weighting of 59% in its top holdings.
The Vanguard Mega Cap ETF might appeal to investors looking to put capital to work in the biggest companies rather than just growth stocks. The fund includes many popular blue chip stocks such as Berkshire Hathaway, JPMorgan Chase, United Health Group, ExxonMobiland more while still having more exposure to Nvidia than the Vanguard S&P 500 ETF.
Risks worth considering
Low-cost ETFs can be effective ways to invest in companies like Nvidia while maintaining diversification. However, it is worth noting that funds with high concentrations in similar types of companies can be volatile.
For example, many large cloud companies are Nvidia’s key customers. If they face a downturn, that will likely have ripple effects on Nvidia’s business, and many top growth stocks could fall simultaneously.
Still, the ETFs discussed can be great choices if you want more exposure to Nvidia without allocating too much of your portfolio.