Beating the S&P 500 can be very difficult over long periods of time. Fees eat into returns; sectors go in and out of favor. But it's not impossible. Identify the right trends or the right value opportunities and you have a clear path to market-beating returns.
Here are three Vanguard exchange-traded funds (ETFs) that are set up nicely for the next decade.
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Vanguard Information Technology ETF
The Vanguard Information Technology ETF (VGT +2.32%) has been an elite performer since 2023. The 20%-plus annual returns won't last forever, but the artificial intelligence (AI) boom is creating a growth opportunity the sector hasn't seen since the internet revolution 25 years ago.
Tech is expected to drive S&P 500 earnings for at least the next two years, and valuations have shrunk to a more reasonable range. The combination of these two factors puts the sector on target for continued outperformance.
Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF (VIG +0.59%) invests in long-term dividend growers. It's not the most exciting option, but its market-cap weighting gives it a higher-than-average tech allocation compared to other dividend ETFs. The fund strikes a balance between growth and income, setting it up for more strong performance in multiple market conditions.
Vanguard Small-Cap Growth ETF
The Vanguard Small-Cap Growth ETF (VBK +1.08%) targets a high-potential market that's been largely ignored for several years. As we saw earlier this year, small caps perform well when the market believes that economic growth has the potential to accelerate.
That environment tends to broaden the number of market outperformers. Considering the years of underperformance relative to large caps, small caps could be due for an extended stretch leading the market higher in the next decade.
