1 Vanguard ETF That Outperforms the S&P 500 and Still Has Room to Run

The S&P 500 is the banal market's astir important index, tracking the 500 largest American companies connected the market. It has go the main benchmark investors usage to measurement their returns, with outperformance and underperformance mostly babelike connected however it compares.

Although investing successful an S&P 500 ETF has proven to beryllium a large mode to physique wealthiness implicit time, determination are plentifulness of investments that person routinely bested the index. One of them is the Vanguard Morningstar Growth ETF (NYSEMKT: VUG), which is underperforming this year, but has historically outperformed and has the imaginable to support the streak going.

Missed Nvidia successful 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" awesome flashed for a little-known chipmaker called Nvidia. For the archetypal clip successful years, that aforesaid "Total Conviction" awesome is flashing for a institution 1/100th the size of Nvidia. Continue »

What you're getting with VUG

VUG focuses connected large-cap maturation stocks, which provides the champion of some worlds: the (relative) semipermanent stableness that comes with larger companies, positive maturation opportunities. Although VUG holds 147 stocks, astir of its show depends connected its apical holdings, with the apical 10 making up 61.8% of the fund:

• Nvidia: 12.60%
  

• Apple: 11.64%
  

• Microsoft: 7.60%
  

• Alphabet (Class A): 5.74%
  

• Alphabet (Class C): 4.52%
  

• Amazon: 4.46%
  

• Broadcom: 4.27%
  

• Meta Platforms: 3.40%
  

• Tesla: 3.26%
  

• Eli Lilly: 2.80%

These companies person proven way records, but are besides built and positioned to thrive for the agelong haul. The maturation quality of the ETF means it's predominantly tech stocks (69.2%), but different noteworthy sectors represented are user discretionary (13.9%), industrials (7.6%), and healthcare (4.6%).

How VUG has performed implicit the years

Every index, stock, oregon ETF has a down period; what matters is however it performs implicit time. Since VUG began trading successful January 2004, it has outperformed the S&P 500 by 1,262% to 929%. A $1,000 concern successful each astatine that clip would present beryllium worthy astir $13,620 and $10,290, respectively (not accounting for VUG's 0.03% disbursal ratio).

The S&P 500 has had a amended twelvemonth and past 12 months, but present is however their returns comparison crossed antithetic years.

Data source: YCharts. Averages arsenic of marketplace adjacent connected Aug. 7.

VUG has outperformed the S&P 500 for 13 of the past 20 years. However, its underperformance this twelvemonth is chiefly owed to the "sluggish" returns of its apical holdings, particularly the "Magnificent Seven" stocks, which relationship for 53.2% of VUG and 31.6% of the S&P 500.