History Says This Is How the Market Will Perform in 2026. Here Are the Best ETFs to Own Headed Into Next Year.
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Signs point to the market continuing to rally next year.Despite all the chatter about the stock market being overheated, the bull market just surpassed its third anniversary. History, meanwhile, gives a clear picture of what will happen next. According to data compiled by Carson Group, every bull market over the past 50 years that has made it to three years has continued until at least five years. There have been five bull markets in that span, with the shortest fizzling out after five years and the longest lasting more than 12 years. Meanwhile, since 1950, bull markets have lasted an average of five and a half years, so this market still should have some legs. In addition, whenever the S&P 500 has rallied more than 35% in a six-month period since 1950, like it did earlier this year, the market has been up 12 months later. During these five periods, the average return a year later was 13.4%. Image source: Getty Images. That said, for exchange-traded fund (ETF) investors, the best strategy remains dollar-cost averaging in both good markets and bad. This will take out trying to time the market, and is what will ultimately help you create long-term wealth. Let's look at three great ETFs to buy as we head into the fourth year of this current bull market.Advertisement The Vanguard S&P 500 ETF The S&P 500 is the benchmark for the U.S. stock market, and very few actively managed funds outperform it in the long run. In fact, over the past decade, only about 14% of actively managed funds have been able to top the index. That is why investing in a fund that tracks the performance of the S&P 500 is a simple yet wise investment choice. With an expense ratio of just 0.03%, the Vanguard S&P 500 ETF (VOO +0.95%) is a great, low-cost option. ExpandNYSEMKT: VOOVanguard S&P 500 ETFToday's Change(0.95%) $5.89Current Price$627.90Key Data PointsDay's Range$623.86 - $628.1152wk Range$442.80 - $634.13Volume173K The ETF has generated a solid 14.6% average annual return over the past decade, as of the end of November. It's performed even better during this bull market run, up an average of 20.5% over the past three years.
The Vanguard Growth ETF While the S&P 500 has been on a strong run, it's largely been growth stocks that have been leading the way higher. That's why investing in the Vanguard Growth ETF (VUG +1.21%) can be a smart move. The ETF essentially tracks the performance of the growth side of the S&P 500, removing the value stocks from the equation. ExpandNYSEMKT: VUGVanguard Index Funds - Vanguard Growth ETFToday's Change(1.21%) $5.81Current Price$487.74Key Data PointsDay's Range$484.33 - $487.7652wk Range$316.14 - $505.38Volume10K The ETF has been a strong performer over the years. It's produced an annual return of 17.2% over the past 10 years. Meanwhile, during this strong three-year run, the ETF has more than doubled, up 107.4%, or 28.9% on a yearly basis. The Invesco QQQ Trust While actively managed funds have struggled to outpace the S&P 500 over the long term, it's been no issue for the Invesco QQQ Trust (QQQ +1.33%). The ETF tracks the performance of the tech-heavy Nasdaq-100 index, and it has outperformed the S&P 500 on a rolling 12-month basis nearly 88% of the time over the past 10 years. That's a remarkable string of consistency. ExpandNASDAQ: QQQInvesco QQQ TrustToday's Change(1.33%) $8.11Current Price$617.22Key Data PointsDay's Range$611.89 - $617.6252wk Range$402.39 - $637.01Volume1.3M With the ETF, investors are getting a heavy dose of the tech stocks leading the charge in artificial intelligence (AI). Nearly two-thirds of the ETF's portfolio is in tech stocks, although if you include cloud computing giant Amazon and autonomous vehicle company Tesla, it would be closer to three-quarters. The ETF has been a great performer, up an average of 19.4% annually over the past decade. During the past three years, it's up an average of 29.1%.Read NextDec 19, 2025 •By Stefon WaltersThe S&P 500 Is Making History to End 2025, But Is It Something Investors Should Celebrate or Be Worried About?Dec 16, 2025 •By William Dahl9,900% Returns: Lessons From a Millionaire JanitorDec 16, 2025 •By Anthony Di PizioShould You Buy the Vanguard S&P 500 ETF With the Stock Market at An All-Time High? History Offers a Clear Answer.Dec 15, 2025 •By Selena MaranjianHere's Where You'll Find the Best Stocks of 2026Dec 15, 2025 •By Selena MaranjianWant $1 Million in Retirement? 9 Simple Index Funds to Buy and Hold for Decades -- Including the Vanguard S&P 500 ETFDec 15, 2025 •By Neil PatelThe Smartest Vanguard ETF to Buy With $1,000 Right NowAbout the AuthorGeoffrey Seiler is a contributing Motley Fool stock market analyst covering technology, consumer goods, healthcare, energy, and materials stocks. Prior to The Motley Fool, Geoffrey was a senior equity analyst at Raging Capital Management, a $600 million long-short hedge fund. He holds a bachelor’s degree in history from Haverford College.TMFFindProfitStocks MentionedVanguard S&P 500 ETFNYSEMKT: VOO$627.90 (+0.01%) $+5.89Invesco QQQ TrustNASDAQ: QQQ$617.22 (+0.01%) $+8.11Vanguard Index Funds - Vanguard Growth ETFNYSEMKT: VUG$487.74 (+0.01%) $+5.81*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement