Sometimes, the best thing an investor can do is not to fight trends, particularly the really obvious ones. A prime example is the competition between growth stocks and their value counterparts.
For the six years spanning 2019 to 2024, the Vanguard S&P 500 Growth ETF (VOOG +0.08%) trailed comparable value-focused exchange-traded funds (ETFs) on just two occasions: 2019 and 2022. In 2019, value's "win" over growth, as measured by this ETF, was negligible. In 2022, all value did was perform less poorly amid bear market conditions.
With just seven weeks left, 2025 will go down as another year in which growth trounced value. The Vanguard Growth ETF is beating S&P 500 value-tracking funds by a margin of nearly 2-to-1, meaning value stocks will need a late-year rally of miraculous proportions to close the gap. And with an eye toward 2026, there's still a lot to like with this growth ETF.
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The ETF's winning recipe
The Vanguard S&P 500 Growth ETF is home to 217 stocks with a median market capitalization of $1.43 trillion, The $21.7 billion ETF is a de facto megacap fund, and that's quite all right because megacap growth stocks, particularly the "Magnificent Seven," have been the primary sources of U.S. equity market leadership for an extended period of time.
Speaking of the Magnificent Seven, this Vanguard ETF is ideal for investors who are cash-constrained and those who don't want to select individual stocks, because all seven of those stocks are among the fund's top 10 holdings. They combine for 47.8% of its holdings, making this ETF a one-stop shop for market participants who want to tap all seven of those popular names.
Past performance and convenience are nice, but smart investors are a "what comes next" lot. No one has a crystal ball, but this Vanguard ETF may offer some clues about future upside. Taking a look at sector-level forward earnings-per-share (EPS) trends, the top two sectors for bullish revisions over the past 30 and 90 days are technology and communication services -- two groups that combine for 58% of this ETF's portfolio.
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Key Data Points
Another reason I'm enthusiastic about the Vanguard growth fund is that a strong case can be made that talk of an artificial intelligence (AI) bubble has been blown out of proportion. That argument is often rooted in a comparison to the internet bubble of 2000.
But the S&P 500 Technology index, a benchmark that's home to basically all of the tech stocks in the Vanguard ETF, trades at 42 times earnings today. That's not cheap, but it's well below the 67 multiple seen in early 2000. Something else the bubble crowd neglects to mention: The tech sector's return on equity is around 30% today, or well ahead of the 25-year average of 20%.
Keep it simple with this Vanguard ETF
Another smart move for investors is to keep things simple, and that's another reason to be excited about the Vanguard Growth ETF. It's a cap-weighted fund that delivers the megacap tech exposure many investors crave. No frills, no gimmicks. Just efficient access to fundamentally sound, high-flying stocks with the potential to build on recent gains in 2026.
All of that comes with a low cost of admission: The Vanguard ETF charges just 0.07% annually, or $7 on a $10,000 investment. That says this fund is ideal for buy-and-hold investors who want growth exposure without having to deal with stock-picking.