2 Vanguard Index Funds to Buy Now -- They Can Beat the S&P 500 Over the Next Decade, According to Wall Street Analysts

By Trevor Jennewine – Dec 17, 2025 at 4:12AM ESTKey PointsJ.P. Morgan analysts expect equities in developed markets (outside the U.S.) and emerging markets to outperform the S&P 500 over the next 10 to 15 years.The Vanguard FTSE Developed Markets ETF provides exposure to the most influential stocks in developed markets like Japan, the U.K., and Canada.The Vanguard FTSE Emerging Markets ETF provides exposure to the most influential stocks in emerging markets like China, Taiwan, and India.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSEMKT: VEAVanguard FTSE Developed Markets ETFMarket Cap$0.0KToday's Changeangle-down(-0.60%) $0.38Current Price$62.46Price as of December 16, 2025 at 4:00 PM ETVanguard index funds that track stocks in developed and emerging markets could beat the S&P 500 in the coming years.The S&P 500 (^GSPC 0.24%) is considered the best gauge for the overall U.S. stock market. It has advanced nearly 16% year to date. But stock markets outside the U.S., in both developed and emerging markets, have generally done better. In 2025, the Vanguard FTSE Developed Markets ETF (VEA 0.60%) has advanced 31%, and the Vanguard FTSE Emerging Markets ETF (VWO 0.56%) has advanced 22%. One reason for their outperformance is that foreign currencies have strengthened compared to the U.S. dollar due to concerns about President Trump's trade and monetary policies. Importantly, J.P. Morgan recently published its long-term market assumptions, and analysts expect the outperformance to continue. Specifically, they expect the S&P 500 to return 6.7% annually over the next 10 to 15 years, while equities in developed and emerging markets achieve annual returns of 7.5% and 7.8%, respectively. Here's what investors should know. Image source: Getty Images. 1. Vanguard FTSE Developed Markets ETF The Vanguard FTSE Developed Markets ETF measures the performance of 3,800 companies located in developed markets outside the United States, especially Japan, the U.K., and Canada. The index fund is most heavily exposed to stocks in the financials, industrials, and consumer discretionary sectors.Advertisement Here are the top five positions, listed by weight: ASML Holding: 1.4% Samsung Electronics: 1.1% AstraZeneca: 0.9% Roche Holding: 0.9% Nestlé: 0.9% The Vanguard FTSE Developed Markets ETF returned 132% over the last decade, while the S&P 500 achieved a total return of 297%. Yet J.P. Morgan analysts expect developed-market equities to outperform the U.S. stock market by 15 percentage points over the next decade due to a combination of more attractive valuations, the strengthening of foreign currencies (relative to the U.S. dollar), and higher dividends. ExpandNYSEMKT: VEAVanguard FTSE Developed Markets ETFToday's Change(-0.60%) $-0.38Current Price$62.46Key Data PointsDay's Range$62.32 - $62.7652wk Range$45.14 - $63.08Volume19 Those arguments are certainly logical, but even the best analysts struggle to consistently predict the future with any degree of accuracy. In 2020, J.P. Morgan estimated the S&P 500 would return 5.7% annually over the long term, but that forecast now seems way off base. The S&P 500 has actually returned 15.1% annually since that prediction was published. The Vanguard FTSE Developed Markets ETF has an expense ratio of 0.03%. That means shareholders will pay $3 per year on every $10,000 invested. Investors who want exposure to stalwart stocks outside the United States should consider this Vanguard index fund. But I would keep my position rather small, and instead prioritize an S&P 500 index fund (and individual U.S. stocks). 2. Vanguard FTSE Emerging Markets ETF The Vanguard FTSE Emerging Markets ETF measures the performance of 6,000 companies located in emerging markets, especially China, Taiwan, and India. The fund is most heavily invested in stocks in the technology, financials, and consumer discretionary sectors. Here are the top five positions, listed by weight: Taiwan Semiconductor: 10.6% Tencent Holdings: 4.5% Alibaba Group: 3.4% HDFC Bank: 1.1% Reliance Industries: 1% The Vanguard FTSE Emerging Markets ETF returned 119% during the last decade, while the S&P 500 achieved a total return of 297%. Nevertheless, J.P. Morgan analysts think emerging-market equities will outperform the U.S. stock market by 20 percentage points over the next due to cheaper valuations and the strengthening of foreign currencies (relative to the U.S. dollar). ExpandNYSEMKT: VWOVanguard International Equity Index Funds - Vanguard Ftse Emerging Markets ETFToday's Change(-0.56%) $-0.30Current Price$53.48Key Data PointsDay's Range$53.28 - $53.6052wk Range$39.53 - $56.04Volume575 The Vanguard FTSE Emerging Markets ETF has a modest expense ratio of 0.07%, meaning shareholders will pay $7 per year on every $10,000 invested in the fund. Investors looking for exposure to international stocks should consider a small position in this index fund, but I would keep a larger percentage of my portfolio in an S&P 500 index fund (and individual U.S. stocks) simply because it has historically been a mistake to bet against the U.S. stock market.About 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@tjennewine1Read NextNov 3, 2025 •By Todd Shriber1 Unstoppable Vanguard ETF I'm Stocking Up On in 2026Nov 2, 2025 •By Cory RenauerThe Vanguard FTSE Developed Markets ETF (VEA) Offers Broader Diversification Than the SPDR Portfolio Developed World ex-US ETF (SPDW)Oct 20, 2025 •By David Jagielski, CPAPrediction: This Unstoppable Vanguard ETF Will Beat the S&P 500 Again in 2026Jul 8, 2025 •By Matt Frankel, CFP$1,000 in VEA Could Turn Into $57,000Jun 28, 2025 •By Patrick SandersIEFA Is a Great Choice for Most, but I Like VEA ETF BetterApr 27, 2025 •By Justin PopeThe Smartest International Stock ETF to Buy With $100 Right Now