Wall Street’s consensus forecast projects the S&P 500 (^GSPC) will climb 22% to reach 9,252 by September 2027, according to FactSet Research.
Analysts expect even stronger gains in two specific sectors, with technology forecast to return 28% and industrials projected to deliver 26% over that same period.
Investors looking to capture those sector-level gains have two straightforward options in the Vanguard Information Technology ETF (VGT) and the Vanguard Industrials ETF (VIS).
The Vanguard Information Technology ETF tracks the performance of 319 stocks across software and cloud services, technology hardware and equipment, and semiconductors and semiconductor manufacturing equipment.
The fund carries a lean expense ratio of 0.09%, meaning investors pay just $9 annually for every $10,000 held in the fund.
Its five largest holdings by weight are Nvidia at 17.7%, Apple at 15.8%, Microsoft at 11.5%, Broadcom at 4.5%, and Micron Technology at 4.2%.
VGT delivered a total return of 787%, or 24.4% annually, over the last decade, compared to a 323% gain, or 15.5% annually, for the S&P 500 over the same period.
The technology sector’s outperformance was driven by widespread adoption of cloud computing and, more recently, artificial intelligence, trends that analysts expect to continue fueling growth.
VGT currently trades at 22 times forward earnings, a relatively modest valuation given that sector-level earnings are forecast to grow at 42% annually through 2027, according to FactSet Research.
Prospective buyers should be mindful of concentration risk, however, since the fund is heavily weighted toward just three stocks, meaning any weakness in Nvidia, Apple, or Microsoft could meaningfully drag on overall performance.
The Vanguard Industrials ETF tracks 397 stocks across capital goods manufacturing, commercial services and supplies, and transportation services, with its heaviest weighting toward aerospace and defense.
VIS also carries a 0.09% expense ratio, with its five largest holdings being Caterpillar at 5.3%, GE Aerospace at 5%, RTX at 4%, GE Vernova at 3.5%, and Deere and Company at 2.3%.
The fund returned 250%, or 13.3% annually, over the last decade, underperforming the S&P 500 as supply chain disruptions, inflation, and high interest rates weighed heavily on capital-intensive businesses.
Looking ahead, industrials stocks could benefit from surging demand for AI infrastructure, which is expected to drive significant spending on power-generation equipment, electrical components, and construction services.
VIS currently trades at 25 times forward earnings, which is considered somewhat expensive given that sector earnings are only forecast to grow at 14% annually through 2027.
Both funds offer low-cost, diversified access to their respective sectors, but the valuation picture and historical track record differ meaningfully between the two.
The information technology fund presents a more compelling near-term case based on earnings growth forecasts, while the industrials fund carries a richer price tag relative to its projected growth rate.
Investors seeking broader market exposure without sector concentration risk may ultimately find that a straightforward S&P 500 index fund remains a more balanced choice for long-term portfolios.
