Is the Vanguard S&P 500 ETF Really a Good Investment Right Now? The Answer Might Surprise You.

By Katie Brockman – Feb 16, 2026 at 3:30AM ESTKey PointsThe S&P 500 ETF is a powerhouse, with a proven track record of success.In most cases, this investment is a smart buy for many people.However, there's a lesser-known drawback that could affect your portfolio.We’re bullish on these 10 stocks ›NYSEMKT: VOOVanguard S&P 500 ETFToday's Changeangle-down(0.06%) $0.40Current Price$626.89Price as of February 13, 2026 at 4:00 PM ETThere's a hidden risk investors should consider right now.The Vanguard S&P 500 ETF (VOO +0.06%) is one of the most popular ETFs out there, and for good reason. It has a proven track record of consistent growth, helping investors build life-changing wealth over time. But with the market experiencing some volatility in recent weeks, is it still a smart buy right now? In most cases, yes. But there's a hidden risk many investors may not realize. Image source: Getty Images. Why the S&P 500 ETF is still a strong investment The Vanguard S&P 500 ETF tracks the S&P 500 Index (^GSPC +0.05%), which has an incredibly strong long-term track record. It's not only survived every recession and bear market it's ever faced, but it's managed to earn positive total returns, too. In fact, analysts from Crestmont Research examined the S&P 500's 20-year rolling total returns and found that every single period was positive overall. This means that if you had invested in an S&P 500-tracking fund at any point in history, you'd have earned positive total returns by holding it for 20 years. ^SPX data by YCharts Part of the reason why the S&P 500 is so consistent is that it encompasses the 500 largest and strongest U.S. stocks. It's a high bar to be included in this index, and many of these companies are industry leaders with decades of proven success. It's also possible to build substantial wealth with this investment. Since 1957, the S&P 500 has earned an average annual return of around 10%. At that rate, $200 per month could transform into around $395,000 after 30 years. One hidden risk to consider The Vanguard S&P 500 ETF is a market-cap-weighted fund, meaning stocks with a higher market cap will make up a larger proportion of the portfolio. This isn't necessarily a bad thing. However, as tech companies grow at breakneck speed, these stocks are making up an increasingly large share of the S&P 500. Tech stocks currently make up more than 34% of the Vanguard S&P 500. Nvidia alone accounts for close to 8% of the fund, with Apple and Microsoft not far behind, rounding out the top three holdings. Of course, tech stocks can also be lucrative, and this tilt toward tech is a big part of the reason why the Vanguard S&P 500 ETF has surged in recent years. But if you're choosing this investment because you're seeking safety and stability, you could face more volatility than expected if the tech sector is hit hard in a potential downturn. Over many years, the S&P 500 ETF is very likely to see positive long-term returns. But its heavy tech focus could lead to greater short-term volatility, which is a factor to consider before you buy.Read NextFeb 14, 2026 •By Jake LerchVOO Has Delivered Higher Returns, But IWM Provides Broad Small Cap ExposureFeb 14, 2026 •By Katie BrockmanPrediction: Buying This Vanguard ETF Today Could Set You Up for LifeFeb 14, 2026 •By Neil PatelThe Best S&P 500 ETF to Invest $500 in Right NowFeb 13, 2026 •By Geoffrey Seiler2 Vanguard ETFs to Buy With $1,000 and Hold ForeverFeb 11, 2026 •By Leo SunWhy Leveraged ETFs Are Considered Among the Market's Most Speculative ProductsFeb 9, 2026 •By Neil PatelHow I'd Invest $10,000 for the Long Term If I Had to Start From Scratch Right NowAbout the AuthorKatie Brockman is a contributing writer at The Motley Fool covering retirement, Social Security, and investing fundamentals. Prior to The Motley Fool, Katie held various writing and editing roles at companies ranging from small start-ups to multimillion-dollar brands. Her work has appeared in USA Today, Inc magazine, and other authoritative media outlets. She holds a bachelor’s degree in business administration and management from Illinois Wesleyan University.TMFKatieBrockmanStocks MentionedVanguard S&P 500 ETFNYSEMKT: VOO$626.89 (+0.06%) $+0.40S&P 500 IndexSNPINDEX: ^GSPC$6836.17 (+0.05%) $+3.41MicrosoftNASDAQ: MSFT$401.20 (0.16%) $0.64AppleNASDAQ: AAPL$255.78 (2.27%) $5.95NvidiaNASDAQ: NVDA$182.81 (2.21%) $4.13*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.