The Nasdaq (NASDAQINDEX: ^IXIC) has officially entered correction territory, falling by close to 13% since mid-February, as of this writing. Monday marked the index’s worst single-day drop since 2022, as it plunged by 4% — fueling concerns about a looming bear market or recession.
The future is still uncertain for the market, and nobody knows whether stock prices will rebound or we’re headed for a deeper downturn. But over the long term, it’s almost guaranteed that the market will recover.
Despite many investors’ concerns, right now could be a fantastic opportunity to “buy the dip” and invest while prices are lower, potentially setting yourself up for hefty gains once the market eventually bounces back. If you’re looking for a tech ETF to snag at a discount, the Vanguard Information Technology ETF (NYSEMKT: VGT) could be a great buy right now.
The Vanguard Information Technology ETF contains 316 stocks from all corners of the tech sector. With the tech-heavy Nasdaq in correction territory, many of the stocks within this ETF have also been hit hard in recent weeks.
The fund itself has dropped by around 11% since the beginning of the year, while its top three holdings — Apple, Nvidia, and Microsoft — have fallen by roughly 9%, 20%, and 10%, respectively, in that period.
Historically, though, this ETF has a strong history of pulling through rough patches. Since its inception in 2004, it’s survived the Great Recession, the COVID-19 crash, and the most recent slump throughout 2022 — all while earning total returns of close to 1,000%.
In other words, if you’d invested $10,000 in this ETF in 2004 and simply stayed in the market, you’d have around $108,000 by today.
Of course, past performance doesn’t predict future returns. There are no guarantees that this ETF will continue thriving over the coming years or that all of the stocks within the fund will recover. But by investing in an ETF, you’ll gain exposure to hundreds of stocks at once. That can better diversify your portfolio and limit your risk if the market takes a more severe turn for the worse.
One other advantage of this fund is its mix of blue chip stocks along with smaller companies. Apple, Nvidia, and Microsoft together make up just over 44% of the entire ETF. The other 56%, approximately, consists of the remaining 313 stocks.
Devoting a large portion of the fund toward a handful of stocks can increase risk, but juggernaut corporations are also more likely to pull through tough economic times. While some smaller corporations may struggle during a market slump, they also have more room for explosive growth when prices begin to pick up again.