1 Vanguard ETF I Trust to Outperform the Market Long Term
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By Stefon Walters – Apr 4, 2026 at 4:15PM ESTKey PointsThe Vanguard Growth ETF (VUG) has outperformed the S&P 500 in 17 of its 22 years of existence.VUG tends to underperform the market when the tech sector isn't performing well.The "Magnificent Seven" stocks account for over 56% of VUG.When investors refer to the "market," it's usually the S&P 500. It tracks around 500 of the largest American companies on the stock market, and its performance is often used as a benchmark for determining whether a stock or ETF has performed "well." Through the first three months of the year, the S&P 500 declined by 4.6%.
The Vanguard Growth ETF (VUG +0.11%) -- which focuses on large-cap growth stocks -- performed worse (declining by nearly 10.5%), but it's an ETF I trust to be a long-term market-beater. Now might not be its best stretch, but its long-term appeal remains strong. Image source: Getty Images. A history of outperforming the market VUG isn't officially a tech ETF, but the growth focus has made it inherently tech-heavy. The tech sector accounts for nearly 65% of VUG, far ahead of the second-most-represented sector, consumer discretionary, at just over 16%. The high concentration in tech hasn't worked out well for VUG this year, but it has historically worked in its favor. Since it hit the market in January 2004, VUG has consistently outperformed the S&P 500. It's up 792% compared to the index's 469% in that span, and it has produced better returns in 17 of those 22 years. Below is how their returns have stacked up over the past decade: YearVUG ReturnsS&P 500 Returns202518.9%16.4%202432%23.3%202345.8%24.2%2022(33.6%)(19.4%)202126.7%26.9%202039%16.3%201935.6%28.9%2018(4.5%)(6.2%)201726.3%19.4%20164.6%9.5% Source: YCharts. Table by author. Past results don't guarantee future performance, so don't take this as a guarantee that the trend will continue. But the larger point is that growth investing has rewarded investors who can stomach the swings that often come with it. There's no shame in tech leading the way Right now, VUG is admittedly too top-heavy, with Nvidia and Apple alone accounting for over a quarter of the ETF, and the "Magnificent Seven" stocks accounting for over 56%. That's very concentrated for a 151-stock ETF. I don't anticipate this being the norm over the long run, but it's worth noting the risks that come with that in the near future. That said, I still expect tech to drive VUG's growth, which is why I'm confident in its long-term outperformance. The tech world has industries that are relatively early in the trajectory that many people expect them to follow. Whether it's cloud computing, cybersecurity, fintech, quantum computing, or any of the breakthroughs from the AI boom, many top tech companies are well positioned for continued growth. Many of these top companies are also in the S&P 500, so VUG will naturally thrive as they and the index continue to grow.Read NextApr 3, 2026 •By Anthony Di Pizio2 No-Brainer Vanguard ETFs to Buy During the Stock Market Sell-OffApr 2, 2026 •By Daniel FoelberMeet the 2 Vanguard ETFs That Are Issuing 6-for-1 Stock Splits in April. Here's Why Both Are Buys Now.Apr 1, 2026 •By Matt DiLallo7 Best ETFs to Buy in April 2026Mar 26, 2026 •By Jake LerchIWO vs. VUG: One Offers Broad Growth Exposure While the Other Has Lower FeesMar 25, 2026 •By Dan CaplingerWill Vanguard Growth Keep Crushing Its ETF Peers?Mar 24, 2026 •By David Jagielski, CPAThe Vanguard Fund That Can Turn $400 Per Month Into More Than $1.5 MillionAbout the AuthorStefon Walters is a contributing Motley Fool stock market analyst covering publicly traded companies across technology, consumer goods, and financials, as well as retirement planning. Stefon is a published author and has more than a decade of experience teaching financial literacy. He holds a bachelor’s degree in economics from the University of North Carolina at Chapel Hill.TMFStefonWStocks MentionedVanguard Growth ETFNYSEMKT: VUG$442.03(+0.11%)+$0.47*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.