Nvidia (NASDAQ:NVDA) has followed up its unbelievable 2023 performance with another jaw-dropping year-to-date gain of 180% at the time of this 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 slowing growth rate, its valuation, or competition picking up and eating away at Nvidia's margins.
Exchange-traded funds (ETFs) that hold Nvidia are excellent ways to get 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 a good fit for you.
Image source: Getty Images.
Betting big on Nvidia
Nvidia is now the second most valuable company in the world, behind Apple. Due to its sheer size, Nvidia now makes up a commanding portion of the S&P 500. When an investor puts $1,000 in an S&P 500 index fund, they are really buying nearly $70 in Nvidia stock and $930 in the rest of the market.
The Vanguard S&P 500 ETF (NYSEMKT:VOO) 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 (NYSEMKT:VGT) | 15.4% | 314 | 0.1% |
Vanguard Mega Cap Growth ETF (NYSEMKT:MGK) | 12.5% | 71 | 0.07% |
Vanguard S&P 500 Growth ETF (NYSEMKT:VOOG) | 11.9% | 234 | 0.1% |
Vanguard Russell 1000 Growth ETF (NASDAQ:VONG) | 11.3% | 394 | 0.08% |
Vanguard Growth ETF (NYSEMKT:VUG) | 10.9% | 182 | 0.04% |
Vanguard Mega Cap ETF (NYSEMKT:MGC) | 7.8% | 194 | 0.07% |
Vanguard S&P 500 ETF | 6.8% | 504 | 0.03% |
Data source: Vanguard.
The Vanguard Information Technology ETF mirrors the performance of the tech sector. Since Nvidia is a tech stock, it makes sense that it makes up such a large percentage of this ETF. In fact, Apple, Nvidia, and Microsoft combined make up a staggering 44.5% of the ETF. While some investors may just jump at the Vanguard 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 primer on each ETF
The biggest drawback of the Vanguard Information Technology ETF is that it doesn't include companies that aren't in the tech sector. For example, Amazon and Tesla are in the consumer discretionary sector. Alphabet, Meta Platforms, and Netflix are 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 holdings in just 10 stocks. The concentration is a double-edged sword because the fund is basically boom or bust based on a handful of names. However, if you believe in today's top companies' long-term growth and have the patience to endure volatility, it could still be worth buying now.
The other ETFs on this list aren't sector-based, so they include all the major growth stocks. The key difference between the funds is their diversification and concentration in the largest names.
The Vanguard S&P 500 Growth ETF is very similar to the Vanguard Mega Cap Growth ETF, just 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 heavily focused on its largest holdings, with 61.2% of the fund in just 10 stocks.
The Vanguard Growth ETF has an expense ratio nearly as low as the Vanguard S&P 500 ETF and a 59% weighting in its top holdings.
The Vanguard Mega Cap ETF could appeal to investors looking to put capital to work in the largest companies rather than just growth stocks. The fund includes many well-known blue chip stocks like Berkshire Hathaway, JPMorgan Chase, UnitedHealth Group, ExxonMobil, and 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's worth noting that funds with high concentrations in similar types of companies can be volatile.
For example, many major cloud companies are Nvidia's key customers. If they face a downturn, that will probably have ripple effects on Nvidia's business, and many top growth stocks could fall simultaneously.
Still, the discussed ETFs can be great choices if you want more exposure to Nvidia without allocating too much of your portfolio.
Should you invest $1,000 in Nvidia right now?
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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. 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. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Nvidia, Tesla, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends UnitedHealth Group 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.
