Picking winning stocks is challenging, requiring extensive research into regulatory filings, competitive landscapes, company value propositions, and management effectiveness. A simpler, more efficient alternative is investing in low-cost exchange-traded funds (ETFs). Among these, Vanguard's stock ETFs have consistently demonstrated their ability to build wealth for shareholders over time.
For long-term investors seeking superior growth, two Vanguard ETFs have consistently outperformed the benchmark S&P 500. These funds have proved their worth over the past 10 years by combining premium portfolios with rock-bottom fees. Let's explore these growth powerhouses and examine what makes them stand out.
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Vanguard Growth Index Fund ETF Shares
The Vanguard Growth Index Fund ETF Shares(NYSEMKT: VUG) stands out as a powerhouse in the growth investing arena. With an incredibly low expense ratio of 0.04%, this ETF offers investors exposure to large-cap growth stocks at a fraction of the cost of actively managed funds.
This fund tracks the CRSP US Large Cap Growth Index, focusing on companies with strong growth potential. This strategy has paid off handsomely, with the fund delivering a staggering 320.5% total return, assuming dividend reinvestment, over the past 10 years, significantly outperforming the S&P 500's 247.7% return over the same period.
VUG Total Return Level data by YCharts
The fund's portfolio shows a robust 24.4% five-year earnings growth rate, highlighting the strong expansion of its constituent companies. Top holdings include tech giants Apple, Microsoft, Nvidia, Amazon, and Meta Platforms, reflecting the ETF's tilt toward innovative, high-growth companies.
Year to date, this Vanguard ETF has already generated a solid 23.4% total return, assuming dividend reinvestment. While the fund's 30-day SEC yield of 0.45% may seem modest, it's important to remember that growth stocks typically prioritize reinvesting profits for expansion rather than paying high dividends.
For investors seeking exposure to America's fastest-growing large-cap companies, this Vanguard ETF offers a compelling blend of strong performance potential and cost-effectiveness.
Vanguard Information Technology Index Fund ETF Shares
The Vanguard Information Technology Index Fund ETF Shares(NYSEMKT: VGT) stands out as a top performer in the tech-focused investment landscape. With a low expense ratio of 0.1%, this ETF provides investors with broad exposure to the U.S. information technology sector at a reasonable cost.
This fund tracks the MSCI US Investable Market Index (IMI)/Information Technology 25/50. This index encompasses a wide range of U.S. companies within the information technology sector, spanning large, midsize, and small-cap stocks as classified under the Global Industry Classification Standard.
The fund's performance has been remarkable, delivering a 554.9% total return over the past 10 years, significantly outperforming the S&P 500 and highlighting the tech sector's strong growth.
The ETF's portfolio demonstrates strong growth potential with a 28.3% five-year earnings growth rate. Its top holdings feature tech powerhouses Apple, Nvidia, Microsoft, Broadcom, and Adobe, underlining the fund's focus on innovative, high-growth tech companies.
Year to date, this Vanguard ETF has generated a strong 21.4% total return. Its 30-day SEC yield of 0.53%, while modest, is typical for growth-oriented tech stocks that often reinvest profits into further expansion and innovation.
For investors looking to capitalize on the ongoing digital transformation across industries, this Vanguard ETF offers a compelling mix of broad tech sector exposure, strong growth potential, and cost efficiency.
Should you invest $1,000 in Vanguard World Fund - Vanguard Information Technology ETF right now?
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. George Budwell has positions in Apple, Microsoft, and Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Adobe, Apple, Meta Platforms, Microsoft, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
