When it comes to investing in the stock market, maybe there's no smarter approach than to keep things simple. With this framework in mind, selecting an exchange-traded fund (ETF) that tracks the S&P 500 index might seem like a no-brainer move. This is true despite the heightened levels of volatility in 2026, leading the closely watched benchmark to trade 5% off its peak (as of April 1).
However, that shouldn't take away from the value proposition of something like the Vanguard S&P 500 ETF (VOO +0.11%), which charges an ultra-low expense ratio of just 0.03% to gain exposure to 500 of America's largest companies. Here's why this investment vehicle still deserves a closer look while it's down.
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A hassle-free investment approach
There are many investors out there that have zero interest in spending hours analyzing specific stocks, reading SEC filings, and listening to earnings calls. They also might not possess the skills required or have the time to actively pick stocks. This is why the Vanguard S&P 500 ETF adds value. It's a hassle-free way to gain exposure to the stock market.
Investors will immediately have access to the S&P 500, which contains the biggest U.S. businesses. If you're bullish on the American economy over the long term, which has historically been a safe bet, then the Vanguard S&P 500 ETF is the right choice for you. All of the sectors are represented.
But it shouldn't come as a surprise that the information technology sector has been the most important, accounting for 32.4% of the portfolio. The impressive rise of these companies has resulted in a much more pronounced weighting.
In particular, investors who buy the Vanguard S&P 500 ETF are optimistic about the future of artificial intelligence. Nvidia, Apple, and Microsoft are the three largest holdings, combining to make up 19% of the asset base.
Key Data Points
Stellar performance at a low cost
Even though the Vanguard S&P 500 ETF trades off its peak right now, its long-term performance has been fantastic. In the past decade, it has generated a total return of 274%. This translates to a 14% annualized gain.
Investors captured this return at a very low expense ratio of 0.03%. For every $10,000 you buy of the Vanguard S&P 500 ETF, just $3 goes to pay the asset management firm each year. This highlights a tremendous value proposition, especially considering that most active fund managers, the so-called experts, lose to the S&P 500 over an extended period of time.
Markets will have periods of above-normal volatility. The best investors continue to keep their attention on the next five years and beyond.
