With the S&P 500 trading near dot-com bubble valuations, some investors are eyeing growth and dividend ETFs for bargains if the market stumbles. Here's how three funds compare on returns and holdings.
The S&P 500 is now priced close to where it was at the top of the dot-com bubble. The Shiller CAPE ratio just hit 41.6. That's not far from its all-time high of 44.2 back in 2000. Numbers like these have investors wondering how much longer the rally can last before a sharp drop. Many are bracing for a correction or even a crash in the next year or two. No one knows exactly when it will happen, but the risk is real enough that some are already planning what to do next.
Instead of chasing expensive funds, some investors are waiting for a reset. They want to put cash to work if prices fall. Three exchange-traded funds (ETFs) stand out for those looking to buy after a selloff. Each one takes a different approach-growth, sector focus, or income. All have their own risks and trade-offs.
According to a Reuters-linked Morningstar report, the top three stocks in the S&P 500-Nvidia, Apple, and Microsoft-collectively made up 21.2% of the index by late September 2026, highlighting the growing concentration in mega-cap tech companies.
Growth ETF concentration and risk
The State Street SPDR Portfolio S&P 500 Growth ETF holds about 140 of the fastest-growing companies in the S&P 500. Its biggest positions are all tech and mega-cap names: Nvidia (14.87%), Microsoft (9.93%), Apple (6.66%), both classes of Alphabet (together over 9%), Broadcom, Meta Platforms, Amazon.com, Micron Technology, and Advanced Micro Devices. Nearly 60% of the fund's assets sit in its top 10 stocks. That means investors are tied closely to the fate of a handful of giants. This can pay off when those companies are rising, but it's a risk if they stumble or if tech falls out of favor.
Official fund disclosures back this up. By late September 2026, the top 10 holdings made up about 59-60% of assets, with a heavy tilt toward mega-cap tech. The State Street SPYG holdings report shows Nvidia, Microsoft, and Apple at the top.
Over the five years ending September 22, 2026, the fund averaged a 14.33% annual return. Its 10- and 15-year returns were even higher: 17.94% and 17.46%, according to Morningstar. But those gains came during a huge tech boom and years of low rates. If the market drops, these same stocks could fall harder, which might open the door for long-term investors who can handle the swings.
Independent market pages, including Yahoo Finance and MarketWatch, confirm that by the end of September 2026, SPYG's top 10 holdings made up about 59.4% of the portfolio, closely matching the fund's official disclosures.
Semiconductor ETF and sector bets
The iShares Semiconductor ETF is a focused play on a sector that powers everything from cars to data centers. The fund holds about 30 semiconductor stocks. Intel, Advanced Micro Devices, and Micron Technology are among the biggest. Like the growth ETF, it's highly concentrated: about 62% of assets are in the top third of its holdings. This setup can boost gains but also magnify losses, especially in a sector known for wild swings.
The returns have been strong. Over the past five years, the ETF averaged 30.75% a year. Its 10-year and 15-year averages were 32.88% and 28.34%. These numbers show how fast the sector has grown, but they also warn of the risk of buying after a big run. For those who believe in long-term chip demand, a market drop could be a rare chance to buy at lower prices. Still, sector ETFs can be volatile, and past returns don't guarantee what comes next.
Dividend ETF for stability and income
Not everyone wants to chase growth after a crash. The Schwab U.S. Dividend Equity ETF takes a different path. It tracks the Dow Jones U.S. Dividend 100 Index and holds about 100 companies with at least 10 years of dividend payments and solid finances. Its recent dividend yield was 3%, giving investors income even when share prices fall. Over the past five years, the ETF averaged a 10.08% annual return, with a 10-year average of 12.79%.
Dividend funds can help balance a portfolio that's heavy on growth. They may also appeal to those who want to lock in higher yields after a drop, when prices are down and yields go up. Dividend stocks aren't immune to downturns, but their payouts can soften the blow and help with recovery.
The S&P 500's CAPE ratio is a key measure of market value. It adjusts for inflation and smooths earnings over 10 years. When this ratio is high, as it is now, future returns have often been lower and volatility higher. Recent market analysis shows that high valuations have already led some investors to rethink their tech-heavy bets.
What to weigh before buying after a crash
Buying ETFs after a correction isn't risk-free. Growth and sector funds can fall harder in downturns, and their rebound depends on both company results and market mood. Investors should think about their time frame, risk comfort, and need for diversification before making moves. Fees, taxes, and the chance of more declines all matter too.
ETFs are baskets of stocks or other assets that trade like shares. They offer instant diversification and are easy to buy and sell. But not all ETFs are the same. Some are tightly focused, others spread risk across hundreds of holdings. Expense ratios, tracking error, and how the index is built can all affect results. It's smart to check each fund's structure and holdings before putting money in, especially when markets are jumpy.
Sector ETFs, like those for semiconductors, can deliver big gains when demand is strong but may drop fast if the industry turns. Growth ETFs often ride the momentum of a few big names, which can help or hurt. Dividend ETFs may offer more stability and income, but their returns can lag when markets are rising. Knowing these trade-offs is key to building a portfolio that can handle both rallies and rough patches.
