The Vanguard S&P 500 ETF (NYSE:VOO), with over $572.79 billion in assets under management, is an investment titan, offering exposure to the U.S. large-cap equity market.

Launched in September 2010, Vanguard happens to be one of the most low-cost ETFs that have an expense ratio of just 0.03%. As a passively managed fund, it mirrors the performance of the S&P 500, a benchmark index for U.S. large-cap stocks.

Large-cap stocks, with market capitalizations surpassing $10 billion, are known for stability, predictable cash flows and relatively low volatility. Vanguard balances growth and value stocks, allowing investors to spread out risks and returns.

Top Holdings

Vanguard's portfolio is concentrated in the Information Technology sector, accounting for 32.4% of its assets. Three of the world's most valuable companies stand atop its holdings: Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Nvidia (NASDAQ:NVDA). Together, these three companies account for 19.88% of Vanguard's total assets and have a big impact on the returns generated by the ETF.

Apple is the ETF's largest holding, with 7.06% allocation to the fund (according to Vanguard ETFs' data from Nov. 30, 2024). However, the tech titan faces challenges. UBS analysts recently gave Apple a neutral rating with a price target of $236, citing weaker-than-expected iPhone sales.

Dwindling demand and declining market share in China have raised concerns, particularly during the critical holiday sales season. Nonetheless, Apple holds a consensus 'buy' rating from 30 analysts, with a price target of $245.27 per share, according to Benzinga Pro. It shows that Apple is still a strong long-term player.

Coming to Nvidia, the chipmaker is riding the artificial intelligence wave, with its stock climbing more than 180% in 2024. The firm's market cap reached a high of $3.29 trillion, an amount that threatens to close the gap with the $3.79 trillion of Apple. At this rate, if Nvidia does not lose momentum in 2025, one might speculate that it could once again challenge Apple as the most valuable company in the world.

Microsoft also continues to thrive on many fronts. Its near-monopoly on in-office software with Office and Dynamics 365, coupled with the dominance of LinkedIn, has cemented its position. The company's cloud-based solutions, including Azure, OpenAI, and GitHub, remain key growth drivers.

Vanguard's Stellar Performance and Outlook

Vanguard has been a top performer, with the market price growing almost 25% in 2024, outpacing the S&P 500's 23% gain. This impressive performance reflects its focus on high-growth companies, particularly in technology.

While the S&P 500 has typically been averaging an annual return of around 10% since 1965, according to Berkshire Hathaway data, Vanguard's targeted strategy on growth stocks within the index gives it an edge. The Vanguard S&P 500 ETF offers investors a cost-efficient way to tap into the U.S. equity market's largest and most stable companies.

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