History Says This ETF Could Be the Biggest Winner of the Stock Market Sell-Off

With nearly 10 months of 2026 in the books, it’s fair to say that this year hasn’t been easy for equity investors, but they’ve been rewarded for taking risks. The Nasdaq-100 and S&P 500 (^GSPC -0.52%) are up 14.6% and 11.7%, respectively, year to date, confirming market participants are being compensated for enduring equity market turbulence.

Those data points also confirm that broader indexes aren’t in corrections, let alone bear markets. Still, bear markets and deep pullbacks are facts of investing life. Rather than timing the market, which is a tall, often fruitless order, smart investors use sell-offs as opportunities to build shopping lists or add to existing positions that may have been overly punished.

Investors who want a potential rebound candidate following a still-theoretical market sell-off may want to keep a close eye on the Vanguard Information Technology ETF (VGT +0.48%).

Recent history vindicates VGT

This $149 billion Vanguard fund, the largest dedicated technology exchange-traded fund (ETF), offers investors recent post-sell-off behavior. Like other sectors, tech tumbled immediately after the onset of the war in Iran, but the pullback was short-lived, and this tech ETF rebounded sharply.

Then in July, the bears again came calling for tech, sending the Philadelphia Semiconductor Index into a bear market in less than a month and to its swiftest correction since the tech bubble popped in 2026. The effects of semiconductor stocks on this Vanguard ETF can’t be understated because the fund devotes 43.6% of its weight to chipmakers and equipment names. The point is, even with some unnerving dips this year, this tech ETF is still up 28%.

Of course, predicting the cause of the next correction or bear market isn’t easy, but some hints may be emerging today. Those include the Federal Reserve’s battle with inflation, waged through higher interest rates. The Fed needs to strike a delicate balance between cooling consumer costs while not threatening economic growth.

It’s admittedly speculative for now, but let’s assume that higher interest rates blunt economic activity, forcing broader equity indexes to decline materially. This Vanguard tech ETF would likely suffer in the immediate aftermath of that scenario, but as market participants reconcile that economic growth could be sluggish for an extended period, growth stocks, including many of this ETF’s components, are likely to become more appealing.

Breadth matters

Another point confirmed by history is that, regardless of sector, stocks don’t rebound from sell-offs uniformly. Specific to tech, consider the recent example of CoreWeave (CRWV -2.46%), which is in a bear market as yields on its corporate debt have blown out amid investor concerns about its debt load.

Can CoreWeave stock rebound? Sure. Does it have to? No.

The point is that picking post-sell-off winners isn’t easy, but the Vanguard ETF eases that burden by holding 318 stocks. So it’s a broad play on the tech sector and one that will rebound when the group does so following corrections.

Long-term investors who want to embrace tech today and not fiddle with market timing may like this fund’s 0.09% expense ratio, or $9 on a $10,000 stake, which is toward the lower end among sector ETFs.