Close Menu
Fund Focus News
    Facebook X (Twitter) Instagram
    Trending
    • Investing in mutual funds? Follow Warren Buffett’s 7 golden rules for bigger returns – Money News
    • Mutual Fund Promotion and Initial Public Offer expense allowed as business expense
    • BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews
    • State Street et UC Investments s’allient pour démocratiser l’accès aux outils de création de richesse
    • Public Companies Are Buying More Bitcoin Than ETFs For Third Quarter In A Row
    • Commercialisation du fond Eiffel High Yield Low Carbon
    • SBI mutual fund launches AI-powered ‘SmartAssist’ on whatsApp, ET CIO
    • Tuttle Capital targets July 16 to launch 10 leveraged crypto ETFs, including XRP, BNB
    Facebook X (Twitter) Instagram
    Fund Focus News
    • Home
    • Bonds
    • ETFs
    • Funds
    • Investments
    • Mutual Funds
    • Property Investments
    • SIP
    Fund Focus News
    Home»ETFs»Prediction: This ETF Will Outperform the S&P 500 Over the Next Decade
    ETFs

    Prediction: This ETF Will Outperform the S&P 500 Over the Next Decade

    August 24, 2024


    This Vanguard ETF looks poised to continue to outperform the S&P 500.

    The S&P 500 has long been viewed as the benchmark for the stock market. It comprises about 500 of the largest companies that trade on a major U.S. stock exchange. It’s a market-cap, weight-based index, which means that the larger the company’s value, the larger the percentage of the index the stock represents.

    Many investment professionals strive to beat the return of the S&P 500, but that has not proven to be an easy task. The index has generated strong results over the years, averaging a 13.2% annual return over the past 10 years as of the end of July. According to S&P, over 87% of U.S. large-cap funds have underperformed the S&P 500 over the past decade.

    However, one exchange-traded fund (ETF) has consistently outperformed the S&P 500 over the past decade, and I think that outperformance will continue in the next decade as well. That ETF is the Vanguard Growth ETF (VUG 1.15%).

    An ETF that consistently outperforms the S&P 500

    The Vanguard Growth ETF is similar to ETFs that track the S&P 500, except that it tracks the CRSP US Large Cap Growth Index, which is basically the growth side of the S&P. The S&P 500 and Vanguard Growth ETF share many of the same top holdings, but the Vanguard ETF generally holds them in a much higher percentage.

    For example, at the end of the second quarter, Apple was the largest holding in both, but the iPhone maker was a 12.9% holding in the Vanguard Growth ETF versus 6.9% in the Vanguard S&P 500 ETF, which tracks the S&P 500.

    As a result, the Vanguard Growth ETF is much more heavily weighted toward technology and consumer discretionary stocks than the S&P 500. Nearly 60% of its portfolio composition is in technology stocks, with another nearly 17% in consumer discretionary stocks. By comparison, the Vanguard S&P 500 ETF’s largest sectors are technology at over 31%, followed by financials at 13%.

    The Vanguard Growth ETF’s heavier weighting toward tech stocks has helped it outperform over the years, with a 15.3% annualized return over the past decade as of the end of July. While that may not sound like much of a difference from the S&P 500’s performance, the additional return on a $100,000 investment in the Vanguard Growth ETF versus the Vanguard S&P 500 ETF would be $73,580 over 10 years.

    Statue of bull trading stocks on a laptop.

    Image source: Getty Images.

    Why the Vanguard Growth ETF should continue to outperform

    While past performance is not a guarantee of future performance, there is a reason to believe that the Vanguard Growth ETF will continue to outperform the S&P 500 over the next decade.

    The fund is much more heavily weighted toward tech stocks, which, in my view, gives it a long-term advantage. These companies have the propensity to grow to become the largest companies in the world. There is a reason why nine of the S&P 500’s largest components are in tech-related companies, which include Amazon and Tesla. In fact, Berkshire Hathaway is the only non-growth company in the S&P’s top 10 holdings.

    Given that growth companies tend to grow to become the world’s largest companies, there is reason to believe that these companies will continue to outperform value companies over the long run. Meanwhile, we are currently in the early innings of what appears to be a major technological shift with artificial intelligence (AI). As AI and technology continue to change the world, being overweight investments in this sector appears to be a good long-term bet.

    With tech valuations more than reasonable now, I predict that the Vanguard Growth ETF will continue outperforming the S&P over the next decade.

    John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Tesla, Vanguard Index Funds-Vanguard Growth ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email

    Related Posts

    Public Companies Are Buying More Bitcoin Than ETFs For Third Quarter In A Row

    July 1, 2025

    Tuttle Capital targets July 16 to launch 10 leveraged crypto ETFs, including XRP, BNB

    July 1, 2025

    Innovator Launches Industry’s First Dual Directional Buffer ETFs™

    July 1, 2025
    Leave A Reply Cancel Reply

    Top Posts

    Investing in mutual funds? Follow Warren Buffett’s 7 golden rules for bigger returns – Money News

    July 1, 2025

    Qu’est-ce qu’un green bond ?

    December 7, 2017

    les cat’ bonds deviennent incontournables

    September 5, 2018

    Quel est le rôle du service des impôts des particuliers (SIP) ?

    May 7, 2020
    Don't Miss
    Mutual Funds

    Investing in mutual funds? Follow Warren Buffett’s 7 golden rules for bigger returns – Money News

    July 1, 2025

    When it comes to investing in mutual funds, new investors often think they need prior…

    Mutual Fund Promotion and Initial Public Offer expense allowed as business expense

    July 1, 2025

    BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews

    July 1, 2025

    State Street et UC Investments s’allient pour démocratiser l’accès aux outils de création de richesse

    July 1, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • YouTube
    • Vimeo
    EDITOR'S PICK

    Gold remains under-allocated despite price surge, ETF demand rising, says Nippon India fund manager

    March 21, 2025

    Bitcoin Key Indicator Turns Bullish As Spot ETFs Record $2.1 Billion Weekly Inflow: New ATH Imminent?

    October 22, 2024

    Sips with a sommelier: Moscofilero | Centre County Gazette

    July 18, 2024
    Our Picks

    Investing in mutual funds? Follow Warren Buffett’s 7 golden rules for bigger returns – Money News

    July 1, 2025

    Mutual Fund Promotion and Initial Public Offer expense allowed as business expense

    July 1, 2025

    BFSI Mutual Funds AUM Surges 37% to ₹48,000 Cr: Rediff Moneynews

    July 1, 2025
    Most Popular

    ₹10,000 monthly SIP in this debt mutual fund has grown to over ₹70 lakh in 23 years

    June 13, 2025

    ₹1 lakh investment in these 2 ELSS mutual funds at launch would have grown to over ₹5 lakh. Check details

    April 25, 2025

    ZIG, BUZZ, NANC, and KRUZ

    October 11, 2024
    © 2025 Fund Focus News
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.