The ETF Most Millionaires Are Buying in 2026 (And It’s Not VOO)

For years, the Vanguard S&P 500 ETF (VOO) has been the bedrock of millionaire portfolios—the ultimate set-it-and-forget-it index fund. It offers broad, low-cost exposure to the entire U.S. economy. However, as we look toward 2026, a growing cohort of sophisticated investors is executing a powerful strategy known as sector rotation. They are strategically shifting massive capital away from this broad market exposure and into a highly focused thematic ETF.

The goal is to capitalize on the single, multi-trillion-dollar trend poised to dominate the next decade: Artificial Intelligence (AI). The ETF they are favoring isn't a traditional index tracker. Instead, it is a concentrated vehicle targeting the essential AI infrastructure and technology stack, seeking to maximize gains from the technological revolution.

The Sector Rotation Secret: Why VOO Won’t Cut It

Sector rotation is an active investment strategy where capital is shifted into sectors expected to outperform the overall market based on the economic cycle or a major structural shift. In the current market cycle, the structural shift is unequivocally AI.

While VOO certainly holds all the major AI giants—like Microsoft, Nvidia, and Alphabet—these companies only represent a portion of the fund's total holdings within its Technology sector allocation. When a technological revolution of this magnitude hits, millionaires seek pure-play exposure for maximum leverage. They are rotating from broad-based, diversified funds into concentrated ETFs that own the entire AI value chain: from the chip designers (semiconductors) to the cloud infrastructure providers (data centers) and the specialized software creators.

The Frontrunner: A Focused AI & Tech ETF

The specific ETF gaining massive traction is not a single ticker, but a representative of a new class of concentrated thematic funds heavily weighted toward the companies providing the essential hardware and software that powers the AI boom. One prime example of this strategy is the iShares Future AI and Tech ETF (ARTY). While strong competitors exist, such as Global X's AIQ or the pure-play Roundhill Generative AI & Technology ETF (CHAT), ARTY is often cited due to its comprehensive focus on the entire AI pipeline.

These funds typically hold a small, concentrated number of stocks (often fewer than 50), focusing on the high-growth areas of Generative AI, advanced semiconductors, and data center infrastructure. Their performance has often dramatically surpassed the S&P 500's returns during the initial years of the AI boom. The top holdings are predictably dominated by the foundational giants of AI, such as Nvidia, Advanced Micro Devices (AMD), Broadcom, and Microsoft, but with a far greater concentration than what is found in VOO, magnifying their impact on returns.

The Caveat: High Risk, High Reward and Cost Factors

While this concentrated approach offers massive upside potential, it inherently comes with significantly higher risk than holding a highly diversified fund like VOO. If a single major holding falters, or if the AI trend experiences a sudden cool-off, the thematic fund's value is highly susceptible to extreme volatility. This is known as concentration risk.

Furthermore, specialized and often actively-managed thematic ETFs typically carry higher expense ratios (often ranging from $0.40\%$ to $0.70\%$) compared to the ultra-low fees of passive index trackers like VOO (which is generally below $0.05\%$). This higher cost must be consistently justified by superior performance. Millionaires and institutional investors are willing to accept this risk in 2026 because they believe the structural change driven by AI infrastructure spending—expected to be in the trillions of dollars over the next five years—will far outweigh the cyclical risks of higher concentration and fees.

Disclaimer : This article is for educational and informational purposes only and is based on potential market strategies and trends. It is not financial advice. Investing in any security, including the ETFs mentioned (such as ARTY, AIQ, CHAT, or VOO), involves inherent risk, including the possible loss of principal. Sector-specific and concentrated thematic ETFs, in particular, carry higher risk and volatility than diversified index funds. Always consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.