Vanguard Information Technology ETF

This ETF mirrors the tech sector's performance. It holds 310 components, but a handful of stocks drive its gains. Apple, Nvidia, and Microsoft make up a staggering 46.3% of the fund due to their sheer size. After all, these are the three most valuable companies in the world. And all three stocks have been rallying hard on news of easing trade tensions.

Despite being much higher today than it was a few weeks ago, the ETF could still be worth buying now if you believe in the competitive advantages of top tech companies.

Apple has an integrated ecosystem that blends hardware and software across devices -- with a growing services segment that keeps consumers engaged. Apple generates so much extra cash and is so confident in the value of its stock that it authorized a $100 billion stock repurchase program earlier this month.

Microsoft is arguably one of the best all-around growth stocks to buy now due to its diversified business model, steady high-margin growth across cloud computing, artificial intelligence (AI), hardware, and software, an impeccable balance sheet, and a massive capital return program.

Nvidia stands to benefit from increased AI spending from hyperscalers like Microsoft, Apple, Amazon, and Meta Platforms. Despite tariff turmoil, hyperscaler spending remains at record highs.

Instead of pulling back on AI spending amid economic uncertainty, Meta Platforms announced on its latest earnings call that it would increase its capital expenditures. Cloud infrastructure giants like Amazon Web Services, Microsoft Cloud, and Google Cloud are all ramping up investments to meet customer demands.

In sum, investing in a technology sector fund is a great way to concentrate capital on top themes like AI and cloud computing.

Vanguard Consumer Discretionary ETF

The consumer discretionary sector is a coiled spring for economic growth. 35.3% of the fund is concentrated in Amazon and Tesla. But beyond that, the fund includes a variety of cyclical sectors that tend to grow in lockstep with the broader economy, like home improvement giants Home Depot and Lowe's Companies , and travel giant Booking Holdings .

Consumer discretionary tends to be one of the hardest hit sectors during a sell-off, but it can also rally quickly when sentiment shifts positively.

The sector is sensitive to economic readings like unemployment and GDP. The sector can boom when consumer spending is high, the economy is growing, and unemployment is low. But these same factors can be a double-edged sword when the economy is contracting.

Investors looking for a fund built around Amazon and Tesla may want to take a closer look at the Vanguard Consumer Discretionary ETF.

Investing in growth stocks with a long-term mindset

Although the discussed ETFs have been surging in lockstep with the rebound in the Nasdaq Composite, investors should make sure they are buying stocks and ETFs for the right reasons and not just riding the market rally higher for a quick gain.

Because all three ETFs are so concentrated in a handful of names, they can be highly volatile to the upside and the downside. So, it's important to want to own the top holdings in each ETF before putting your hard-earned savings to work.

ETFs can be excellent plug-and-play tools for aligning investments with financial objectives by getting exposure to top stocks. However, investors looking for less volatility may want to steer clear of the discussed ETFs and look for more diversified funds that aren't so top-heavy.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Booking Holdings, Goldman Sachs Group, Home Depot, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Oracle, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Broadcom and Lowe's Companies and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .

The Nasdaq Just Soared 30% From Its 2025 Low: 3 Vanguard ETFs to Buy Now was originally published by The Motley Fool