Should You Buy This Vanguard Fund That’s Soared 136% Over 3 Years Before April 17?
Technology stocks and funds have skyrocketed in recent years as investors rushed to get in on the next big revolution: artificial intelligence (AI). Like the internet or the printing press, AI may enter history books as one of the biggest transformations in the world of technology. And companies and investors involved in the early stages may score a major win.
This idea has sparked investor interest in tech stocks and funds, driving them to highs. And one of these winning assets has been the Vanguard Information Technology ETF (NYSEMKT: VGT). Over the past three calendar years, this exchange-traded fund has soared 136%. Since the start of this year, it’s slipped about 6%, but at about $700 a share, it remains close to its peak price of more than $750.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
In a couple of weeks, the fund’s managers will do something that will drastically change the price of this hot ETF. With this in mind, should you buy shares before the key date of April 17? Let’s find out.
So, what exactly is happening later this month? Vanguard has decided to launch share splits for several of its funds, and one of them is the Vanguard Information Technology ETF. Vanguard says the reason for this is “to widen availability for investors by keeping share prices within accessible trading ranges.”
Before going into the details and answering our question, here’s a quick refresher on how share splits work. A stock or share split offers current holders of a particular asset additional shares — this doesn’t change the total value of their investment, but instead, lowers the value of each share.
The ratio of the split determines how many shares you will hold and their value after the operation. So, for example, in a 10-for-1 split, if you hold 1 share before the operation, you’ll receive nine more shares as part of the deal. This would bring a $1,000 stock or fund down to $100 per share.
The Vanguard IT fund will undergo an 8-for-1 split, meaning holders will receive seven additional shares for every one they already own. And at the price of the ETF today, that would bring each share to just over $85.
As mentioned, companies or, in this case, funds do this to make an asset that’s climbed considerably an easier buy for a broader range of investors. Often, when a stock or fund approaches the $1,000 level, companies themselves or, in the case of a fund, fund management companies decide on a split; the price of $1,000 may represent a psychological barrier for some investors, as they might view the asset as pricey even if the valuation is reasonable. So, this could be a wise move to keep investors interested in a particular stock or fund.





