VGT DCA Backtest
If you'd invested $700 every month, how long to $1M?
VGT (Vanguard Information Technology ETF) holds hundreds of companies in the U.S. information-technology sector. Vanguard launched it in 2004, and it tracks the MSCI US IMI Information Technology Index. It ranges from mega-cap tech names like Apple, Microsoft, and Nvidia to software, semiconductor, and IT-services companies — broader than SOXX but narrower in sector scope than QQQ, making it a 'tech-sector specialist' ETF.
Investing since May 2010, that's about $1M today · invested $136.5K · annualized +20%
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Hundreds of holdings, but a handful of names lead the way
VGT holds hundreds of information-technology companies spanning semiconductors, software, hardware, and IT services, so by name alone it sounds broadly diversified. But because it's weighted by market cap, a handful of mega-caps — Apple, Microsoft, Nvidia — make up a large share of total assets. Plenty of tickers, but the actual moves are driven largely by a few companies at the top.
That also means significant overlap with QQQ (the Nasdaq-100). The difference is that QQQ mixes in communications and consumer names alongside tech, while VGT is narrowed strictly to the information-technology sector — making it even more concentrated in tech than QQQ.
How it differs from SOXX and QQQ
Where SOXX concentrates on a single industry — semiconductors — VGT spans the broader information-technology sector, including software, cloud, and IT services alongside chips. So it's more diversified within the sector than SOXX, but it shares the same limitation of sitting inside one big theme: 'tech stocks.'
Compared with QQQ, VGT is narrowed strictly to information technology, so it skips the communications and consumer mega-caps that sit inside the Nasdaq-100. The result is something closer to a 'pure' tech-sector index than QQQ — and correspondingly more exposed when the tech sector as a whole wobbles.
The price of concentration — bigger gains, bigger drops
The information-technology sector has been a leading driver of U.S. market gains over roughly the past decade, and VGT has often outperformed the broader market riding that wave. But that's the payoff for concentrating in one sector — there's no guarantee the same trend continues going forward.
During rate-hike periods or whenever concerns about tech valuations flare up, VGT has tended to fall more deeply than the market average. Even though it looks diversified on paper, it's still concentrated in a single theme — tech — which sets it clearly apart from broadly diversified products like SPY or VT.
If you're accumulating steadily
VGT is a U.S.-listed ETF, so as a USD investor you don't need to think about currency conversion — your gains and losses are already denominated in dollars. What you should weigh instead is cost, and how capital gains taxes apply to you: the rules depend entirely on your country of residence, so it's worth checking with a local tax professional rather than assuming a single rate applies to everyone.
The more volatile an asset, the more dollar-cost averaging's 'buy more when it's cheap' effect can work in your favor — but if your start date happens to be a bad one, you may have to sit through a long stretch below your cost basis. Past returns don't guarantee the future, so it's worth checking this yourself by varying the start date in the calculator.
Want to change the amount, buy day, or goal? Use the button above to calculate it yourself.
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This content is for informational purposes and is not investment advice or a recommendation. You are solely responsible for your investment decisions.