Vanguard Growth ETF vs. Vanguard Value ETF: Which ETF Will Outperform in 2026?

By Geoffrey Seiler – Dec 9, 2025 at 4:34PMKey PointsGrowth stocks are set to outperform value stocks once again in 2025.Growth stocks have dominated for much of the past decade.There's still a case for value stocks in 2026.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSEMKT: VUGVanguard Index Funds - Vanguard Growth ETFMarket Cap$0.0MToday's Changeangle-down(-0.02%) $0.10Current Price$493.04Price as of December 9, 2025 at 4:00 PM ETThe growth-versus-value debate is heating up, heading into 2026.As 2025 draws to a close, growth stocks are once again set to outperform value stocks. This is evident in the returns of the Vanguard Growth ETF (VUG 0.02%), which tracks the CRSP US Large Cap Growth index, and the Vanguard Value ETF (VTV 0.27%), which mimics the performance of the CRSP US Large Cap Value index. These indexes are essentially the growth and value portions of the S&P 500. As of this writing, the Vanguard Growth ETF is up 20.3% on the year, while the Vanguard Value ETF is up 12.7% year to date. That would mark the eighth year that growth stocks outperformed value stocks over the past 10 years and the 13th time in 16 years going back to 2010. YearVanguard Growth ETF ReturnVanguard Value ETF Return202432.6%15.9%202346.9%9.3%2022(33.1%)(2%)202127.2%26.4%202040.3%2.3%201937.3%25.8%2018(3.4%)(5.5%)201727.8%17.4%20166.2%17%20153.3%(0.9%)201413.6%13.2%201332.4%33.1%201217%15.2%20111.8%1.1%201017.2%14.5% Data source: Vanguard. Chart by author. It's been a decade of dominance for growth stocks. Over the past 10 years, the growth ETF has generated a cumulative total return of 389.7%, or an average annual return of 17.2%, as of the end of November. Meanwhile, the value ETF has had an average yearly return of nearly 11.5% over that same stretch. That equates to a 196% cumulative return, which is nearly half of that produced by the growth ETF. Which exchange-traded fund (ETF) will outperform in 2026? I'll examine the case for each. The case for the Vanguard Growth ETF Growth stocks have been powering the market higher for much of the past 15 years, and today, most of the world's biggest companies are considered growth companies. In fact, 8 of the 10 largest stocks in the S&P 500 are classified as growth stocks.Advertisement Most of these megacap growth companies are in the tech sector or have heavy tech components to them. More than 60% of the growth ETF's portfolio is in tech stocks. Meanwhile, that percentage would bump up to more than 70% if you included Amazon, which is the world's largest cloud computing provider, and Tesla, which is looking to be a leader in autonomous driving and robotics. Both of those stocks are in the consumer discretionary bucket. ExpandNYSEMKT: VUGVanguard Index Funds - Vanguard Growth ETFToday's Change(-0.02%) $-0.10Current Price$493.04Key Data PointsMarket Cap$0BDay's Range$491.19 - $493.9452wk Range$316.14 - $505.38Volume811KAvg Vol0Gross Margin0.00%Dividend YieldN/A It doesn't matter which sector you put them in, though, because the top eight stocks in the growth ETF's portfolio are all heavily tied to artificial intelligence (AI). Combined, these eight megacap growth stocks -- Nvidia, Apple, Microsoft, Alphabet, Amazon, Broadcom, Tesla, and Meta Platforms -- make up about 60% of the growth ETF's portfolio. As such, whether the growth ETF outperforms in 2026 is largely going to come down to how these AI stocks perform. While AI looks like it's still in its early innings, there's a good chance that the streak of growth stocks outperforming will continue in 2026. The case for the Vanguard Value ETF There's a growing argument that there's an AI bubble, as some AI valuations have become stretched and companies are spending an exorbitant amount to build out AI infrastructure. If this bubble pops, value stocks are likely to outperform. ExpandNYSEMKT: VTVVanguard Index Funds - Vanguard Value ETFToday's Change(-0.27%) $-0.51Current Price$188.93Key Data PointsMarket Cap$0BDay's Range$188.87 - $190.5052wk Range$150.43 - $191.38Volume2.6MAvg Vol0Gross Margin0.00%Dividend YieldN/A Value stocks tend to outperform in bear markets, as can be seen by how the value ETF easily topped the growth ETF in 2022. They also performed well coming out of the dot-com bust, outpacing growth stocks between 2001 and 2008. While growth stocks have clearly dominated the past 15 years, that hasn't been typical. In fact, Nobel Prize laureate Eugene Fama and Dartmouth professor Kenneth French found that between 1927 and 2019, value stocks topped growth 93% of the time on a 15-year rolling basis. Meanwhile, with the Fed preparing to begin lowering interest rates, next year could be a better environment for value stocks. Many value stocks are more cyclical in nature and tend to carry debt, so lower rates can both boost the economy and lower interest expense, driving earnings growth for these companies. Image source: Getty Images. The verdict Many of the top AI stocks that have been fueling the market's rise still look reasonably valued, given their growth prospects, and also have great balance sheets and tend to generate strong free cash flow. Bull markets also tend to have staying power. As such, I'd prefer to own growth stocks heading into 2026 and think the Vanguard Growth ETF looks poised to outperform, once again.About 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.TMFFindProfitRead NextDec 1, 2025 •By Katie BrockmanS&P 500 Stability vs. Superior Growth: Is VOO or VUG the Better ETF for You?Nov 29, 2025 •By Rachel Warren3 Growth ETFs to Buy With $5,000 and Hold ForeverNov 29, 2025 •By David Jagielski, CPAWorried About the Stock Market? 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