The past decade has been very kind to U.S. stocks, but particularly to those of fast-growing companies. Despite the 2022 bear market and the 2020 COVID-19 pandemic, many growth and tech stocks have doubled, tripled, and even more.
One of those is the Vanguard Russell 1000 Growth ETF (VONG 1.42%). Its focus on large-cap companies with favorable growth fundamentals that aren't overpriced has been exactly what investors have been favoring for years.
One unique feature is the use of the price-to-book (P/B) ratio in its selection criteria. Most growth ETFs focus primarily on sales and revenue growth to define growth. The Vanguard Russell 1000 Growth ETF also considers valuation in its methodology. While it's not given enough weight to tilt the overall portfolio too far toward the value side of the pendulum, it does help ensure the fund isn't dipping too deeply into overvalued names.
Image source: Getty Images.
VONG: Performance and key metrics
Over the past 10 years, the Vanguard Russell 1000 Growth ETF has generated an average annual return of 18.3%, translating to a total return of approximately 440%. That means an investment of $1,000 would have grown to about $5,400.
That number is even modestly better than the return of the more popular Vanguard Growth ETF (VUG 1.33%) over the same time frame.
Data by YCharts.
The driving force behind the returns has clearly been the artificial intelligence (AI) boom. Since this portfolio is market-cap-weighted, it has heavy weightings in many of the biggest megacap beneficiaries.
Tech stocks account for roughly 63% of the portfolio, a high number but not quite as high as the 70% level that some growth funds are approaching.
Its top five holdings are:
| Company | Ticker | Weighting |
|---|---|---|
| 1. Nvidia | NVDA | 13.1% |
| 2. Apple | AAPL | 12% |
| 3. Microsoft | MSFT | 9% |
| 4. Alphabet | GOOG/GOOGL | 7.1% |
| 5. Broadcom | AVGO | 5.8% |
Data source: Vanguard.
Why the next decade could be even better
While the future is impossible to predict, growth investors will appreciate that the setup here is still quite positive.
In the end, stock prices are driven by earnings growth. Earlier in the decade, tech and growth stock gains were produced in part by rising valuations. In other words, valuations were expanding faster than earnings were growing.
NASDAQ: VONG
Key Data Points
Now, that dynamic is reversing. Earnings are growing faster than valuations, and that's bringing price-to-earnings (P/E) ratios down. As recently as the fourth quarter of 2025, the Vanguard Russell 1000 Growth ETF was trading at a forward P/E ratio of 31. Today, it's trading at just 25 times next year's earnings forecasts.
S&P 500 earnings growth is expected to come in at 23% in 2026. Tech is expected to grow at 63% and continue that momentum into 2027.
With earnings growth driving growth stocks higher and valuations becoming more reasonable, the future looks strong for the Vanguard Russell 1000 Growth ETF.
