Had you invested in a fund tracking the S&P 500 at the start of 2025, you would be sitting on a 5% gain right now. However, had you invested in the Vanguard S&P 500 Growth ETF (VOOG +0.47%) instead, you would have earned an even better return of 8% over the same period.
The Vanguard S&P 500 Growth ETF is an exchange-traded fund (ETF) that tracks the performance of the S&P 500 Growth index. This index holds 211 of the best-performing growth stocks from the regular S&P 500 and disregards the rest, so it assigns much higher weightings to powerhouses like Nvidia and Microsoft.
The Vanguard S&P 500 Growth ETF has beaten the S&P 500 annually, on average, since it was established in 2010. Here's why investors with a spare $400 might want to put it toward buying one share in the ETF in July, with the goal of holding it for the long term.
Image source: Getty Images.
The world's best growth stocks packed into one ETF
The S&P 500 Growth index selects its constituents from the regular S&P 500 based on factors like their sales growth and the momentum of their stock prices. Therefore, it's no surprise that the top five holdings in the Vanguard S&P 500 Growth ETF are Nvidia, Microsoft, Apple, Meta Platforms, and Broadcom (in that order). Those five positions alone make up 34.1% of the total value of its portfolio.
Those companies are among the leaders in high-growth segments of the tech industry, like artificial intelligence (AI). Since the start of 2023 alone, Nvidia stock has soared tenfold, driven by surging sales of its data center chips, which are designed specifically for AI development.
NASDAQ: NVDA
Key Data Points
Although the performance of this ETF is heavily influenced by a handful of technology stocks, it does offer diversification. For example, the following 10 stocks alone represent 14.4% of the value of its portfolio, and none of them are in the tech or tech-adjacent industries:
|
Stock |
Vanguard ETF Portfolio Weighting |
|---|---|
|
Visa |
2.38% |
|
Eli Lilly |
2.20% |
|
Mastercard |
1.80% |
|
Costco Wholesale |
1.74% |
|
Berkshire Hathaway Class B |
1.71% |
|
JP Morgan Chase |
1.59% |
|
Walmart |
1.08% |
|
Progressive Corp |
0.63% |
|
Caterpillar |
0.63% |
|
American Express |
0.62% |
Data source: Vanguard. Portfolio weightings are accurate as of May 31, 2025, and are subject to change.
Visa and Mastercard operate two of the world's largest payment networks, facilitating transactions between consumers, retailers, and banks. American Express is another major player in this space, except it also issues its own cards to consumers and businesses and funds the lines of credit attached to them.
Berkshire Hathaway, on the other hand, is a conglomerate run by legendary investor Warren Buffett. It owns a number of private subsidiaries like GEICO Insurance and Duracell, and it also has a $286 billion portfolio of publicly traded stocks and securities.
NYSE: BRK.B
Key Data Points
Costco and Walmart are two of America's largest retailers. Costco uses a membership-based model and sells products in bulk at heavy discounts, whereas Walmart operates more traditional stores selling everything from groceries to clothing. Walmart has also built a strong online presence to compete with e-commerce giants like Amazon.
One of the most attractive features of the Vanguard S&P 500 Growth ETF is its ultra-low cost. It has an expense ratio of just 0.07%, so an investment of $10,000 would incur an annual fee of just $7. Vanguard says comparable funds across the industry are more than 10 times as expensive, with an average expense ratio of 0.93%.
The Vanguard ETF has a fantastic track record against the S&P 500
The Vanguard S&P 500 Growth ETF has delivered a compound annual return of 16% since it was established in 2010, handily beating the S&P 500, which rose by an average of 13.4% over the same period.
The 2.6 percentage-point difference each year might not sound like much, but over time it would've made a huge difference in dollar terms for investors thanks to the magic of compounding:
|
Fund |
Starting Balance (2010) |
Compound Annual Return |
Balance In 2025 |
|---|---|---|---|
|
Vanguard S&P 500 Growth ETF |
$50,000 |
16% |
$463,276 |
|
Vanguard S&P 500 ETF |
$50,000 |
13.4% |
$329,735 |
Calculations by author.
As I highlighted at the top, the Vanguard ETF is on track to outperform the S&P 500 yet again in 2025. A number of tailwinds could benefit growth stocks in the second half of the year, including President Trump's tax cuts, a potential decline in interest rates, and a continued increase in spending on AI data center infrastructure and software. As a result, this could be a great ETF for investors to buy with $400 in July.
