Buy 3 Vanguard Index Funds to Beat the S&P 500 in the Next Year, According to Wall Street

By Trevor Jennewine – Mar 3, 2026 at 4:12AM ESTKey PointsThe Vanguard Information Technology ETF provides heavy exposure to Nvidia, Apple, and Microsoft.The Vanguard Communications Service ETF provides heavy exposure to Alphabet and Meta Platforms.The Vanguard Consumer Discretionary ETF provides heavy exposure to Amazon and Tesla.The S&P 500 (^GSPC +0.04%) is generally considered the best benchmark for the U.S. stock market. The consensus estimate among Wall Street analysts says the index will climb to 8,305 in the next 12 months, implying 21% upside from its current level of 6,880. Analysts expect three market sectors to perform better during that period. They are listed below, along with the upside implied by the consensus target prices of Feb. 28. Information technology: 32% Communications services: 24% Consumer discretionary: 22% Investors can get exposure to those stock market sectors with three index funds: the Vanguard Information Technology ETF (VGT +0.99%), the Vanguard Communications Services ETF (VOX 0.10%), and the Vanguard Consumer Discretionary ETF (VCR 1.18%). Here are the important details. Image source: Getty Images. 1.

Vanguard Information Technology ETF The Vanguard Information Technology ETF measures the performance of 320 stocks in the information technology sector, which includes three major segments: software and cloud services, technology hardware and equipment, and semiconductors and semiconductor manufacturing equipment. This index fund has an expense ratio of 0.09%. The top five holdings in the Vanguard Information Technology ETF are: Nvidia: 18% Apple: 14.3% Microsoft: 10.9% Broadcom: 4.3% Micron Technology: 2.3% In the last three years, the information technology sector returned 132% (32% annually), which made it the second-best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 82% ExpandNYSEMKT: VGTVanguard Information Technology ETFToday's Change(0.99%) $7.19Current Price$733.89Key Data PointsDay's Range$716.00 - $735.9852wk Range$451.00 - $806.99Volume122 In the last decade, the information technology sector returned 758% (24% annually), which made it the best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 313%. Here's the big picture: The information technology sector beat the S&P 500 over the last three years and the last decade, and that outperformance is likely to continue as artificial intelligence drives the market in the coming years. However, investors should be aware of the concentration risk. This index fund has more than 40% of its assets invested in three stocks, which means they factor very heavily into its performance. 2.

Vanguard Communications Services ETF The Vanguard Communications Services ETF tracks the performance of 117 stocks in the communications services sector, which is heavily weighted toward three industries: telecommunications, interactive media, and entertainment. This index fund has an expense ratio of 0.09%. The top five holdings in the Vanguard Communications Services ETF are: Alphabet: 25% Meta Platforms: 24.6% Walt Disney: 4% Verizon Communications: 3.9% AT&T: 3.8% In the last three years, the communications services sector returned 170% (32% annually), which made it the best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 82%. In the last decade, the communications services sector returned 237% (13% annually), which made it the fifth-best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 313%. Here's the big picture: The communications services sector beat the S&P 500 over the last three years but underperformed over the last decade. I think the sector will beat the S&P 500 in the years ahead as themes like AI and streaming media continue to drive the market. However, this index fund is heavily tied to Alphabet and Meta Platforms, so its performance depends in large part on those stocks. 3.

Vanguard Consumer Discretionary ETF The Vanguard Consumer Discretionary ETF tracks 285 stocks in the consumer discretionary sector, which includes two segments: manufacturing and services. The manufacturing segment covers apparel, automotive, household, leisure, and textile products; the services segment includes hotels, restaurants, and various retailers. This index fund has an expense ratio of 0.09%. The top five holdings in the Vanguard Consumer Discretionary ETF are listed below: Amazon: 23% Tesla: 17% Home Depot: 5% McDonald's: 3.2% TJX Companies: 2.4% In the last three years, the consumer discretionary sector returned 70% (19% annually), which made it the fourth-best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 82%. In the last decade, the consumer discretionary sector returned 240% (13% annually), which made it the fourth-best-performing sector during that period. Meanwhile, the S&P 500 achieved a total return of 313%. Here's the big picture: The consumer discretionary sector underperformed the S&P 500 over the last three years and the last decade. The index could outperform in the future if the economy remains resilient. But this index fund is heavily invested in Amazon and Tesla, so its performance depends in large part on those stocks.Read NextFeb 17, 2026 •By Chris NeigerThe Smartest Vanguard ETF to Buy With $2,000 Right NowFeb 12, 2026 •By Trevor JennewineBuy 2 Vanguard Index Funds to Beat the S&P 500 in the Next Year, According to Wall StreetFeb 2, 2026 •By David DierkingThe Best Growth ETFs to Invest $1,000 in Right NowFeb 1, 2026 •By David Jagielski, CPACould This Tech-Heavy Vanguard Fund Be Due for a Significant Decline in 2026?Jan 31, 2026 •By Katie BrockmanFTEC vs. VGT: Which of These Popular Tech ETFs Is the Better Buy for Investors?Jan 25, 2026 •By Robert IzquierdoBetter Artificial Intelligence Tech ETF: Roundhill's CHAT vs. Vanguard's VGTAbout the AuthorTrevor Jennewine is a contributing Motley Fool stock market analyst covering technology, cryptocurrency, and investment planning. Prior to The Motley Fool, Trevor managed several pharmacies. He holds a doctor of pharmacy degree from Oregon State University, a master’s degree in business administration from Miami University, and a bachelor’s degree in biology from Miami University.TMFphoenix12X@tjennewine1Stocks MentionedVanguard Information Technology ETFNYSEMKT: VGT$733.89(+0.99%)+$7.19S&P 500 IndexSNPINDEX: ^GSPC$6,881.62(+0.04%)+$2.74Vanguard World Fund - Vanguard Communication Services ETFNYSEMKT: VOX$191.91(-0.10%)-$0.20Vanguard World Fund - Vanguard Consumer Discretionary ETFNYSEMKT: VCR$379.76(-1.18%)-$4.52*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.