One type of fund is not frequently featured in the media. Unlike leveraged AI plays, it doesn’t run ostentatious advertising campaigns, promise moonshots, or garner as much attention on financial Twitter. Nevertheless, the Vanguard S&P 500 ETF is quietly compounding on a screen in practically every brokerage office in Chicago or Manhattan. Ticker VOO. The expense ratio is a pitiful 0.03%. No other ETF has ever had net assets close to $1 trillion.
It’s worth stopping for that alone. Investors contributed more than $100 billion to this one fund in 2025. Not into a thematic AI basket created by a Midtown marketing team, not into some trendy semiconductor brand, but into a standard index fund that just so happens to own the largest companies in America. It seems that common investors’ perceptions of artificial intelligence have changed. They are no longer pursuing. They have begun to own.
The more intriguing story is what has quietly taken place inside VOO. The top five holdings in the S&P 500—Nvidia, Apple, Microsoft, Amazon, and Alphabet—now make up about 25% of the fund, making it extremely top-heavy. The top ten? over 36%. About 34% of the portfolio is made up of information technology alone. Therefore, purchasing VOO today does not equate to purchasing 500 businesses. Under the placid guise of diversification, you are purchasing a concentrated wager on the creators of the AI economy.
It’s difficult to ignore the irony. To avoid placing bets, people used to purchase index funds. They are now making one of the biggest sector bets in the history of the modern market by owning the index, and the majority of them appear to be quite happy with that.
The logic is not irrational. Almost all significant AI developments worldwide are powered by chips made by Nvidia. Two of the cloud platforms used by the majority of those models are run by Microsoft and Alphabet. More consumer hardware is still sold by Apple than by any other company. Despite being overlooked in the hype surrounding AI, Amazon’s AWS is still the world’s biggest provider of cloud infrastructure. In essence, owning VOO means having the buyers, picks, rails, and shovels all in one trade. without having to pay someone 0.67% annually to put it together.
The cost story is more important than most people realize. The older and more well-known S&P 500 ETF, SPY, has a fee of roughly 0.09%, which is three times that of VOO. That difference becomes real money on a serious portfolio held for 20 years. Over time, fees are reduced by Vanguard’s mutual structure, in which the investors own the funds in theory. It’s an unglamorous, slow edge. However, in finance, edges of any kind are uncommon.
However, nothing is risk-free. A few mega-cap failures could have a negative impact on the entire fund. It is understandable that some veterans are anxious about stretched tech valuations. The fund doesn’t own any foreign stocks, bonds, or small caps, but it’s important to note that its biggest companies are global by nature and generate income in dozens of markets.
Investors who are concerned about purchasing at the wrong time frequently use dollar-cost averaging, which involves investing a set amount every month regardless of price. It’s the kind of tactic that seems dull until it succeeds. Given how much is riding on the development of AI, it’s possible that most portfolios are currently in need of something dull.
