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World ETF Outperforms S&P 500 on AI Boom
11 Oct
Summary
- S&P 500 index funds exclude many vital AI stocks.
- The Vanguard Total World Stock ETF includes global AI leaders.
- SpaceX cannot join S&P 500 until at least June 2027.
The S&P 500 index, a benchmark for many investment funds, notably omits several key artificial intelligence stocks. Companies like SpaceX, Anthropic, and OpenAI face lengthy waiting periods before potential inclusion, with SpaceX earliest eligible in June 2027. This exclusion is due to the index's requirement for companies to have traded on an exchange for at least 12 months.
In contrast, the Vanguard Total World Stock ETF provides broader exposure, already holding SpaceX shares and incorporating global AI leaders. Major semiconductor firms such as Taiwan Semiconductor, Samsung Electronics, SK Hynix, and ASML are among its top holdings. These companies are crucial to the AI value chain, particularly in chip manufacturing and memory design.
The World ETF, with over 10,000 holdings, offers greater diversification than the S&P 500. While the S&P 500 has a significant weighting in a few U.S. tech giants, the World ETF distributes its investments more broadly, including vital non-U.S. AI players. Its expense ratio is a competitive 0.06% for extensive global market access.
