Vanguard markets 86 exchange-traded funds (ETFs). You can buy Vanguard bond and stock ETFs of nearly any flavor.
Thirty Vanguard ETFs have delivered year-to-date returns of at least 20%. But that’s not too hard to do, with stocks and bonds soaring. What’s more important is how these funds have performed over the longer term.
If you’re looking for the best of the best, one member of the Vanguard family is worthy of the prize. Meet the only Vanguard ETF that has turned $10,000 into more than $93,000 since 2010.
Image source: Getty Images.
Better than the S&P 500
When many think of the stock market, the S&P 500 immediately comes to mind. That’s understandable. The index features the 500 largest U.S. companies, many of which are household names. As the S&P 500 goes, so goes the overall stock market.
However, the biggest winner among Vanguard ETFs isn’t an S&P 500 fund. Instead, it’s the Vanguard Russell 1000 Growth ETF (VONG -2.10%). This Vanguard ETF attempts to track the Russell 1000 Growth Index. The index features growth stocks that are members of the Russell 1000, which includes around 1,000 of the largest U.S. companies, representing roughly 93% of all U.S. equities.
The Vanguard Russell 1000 Growth ETF owns 394 stocks with a median market cap of $1.4 trillion. Its top seven holdings — Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Alphabet Class A, and Alphabet Class C — comprise around 51.5% of the ETF’s portfolio.
This ETF has been the third-best-performing Vanguard ETF over the last five years and second over the last 10 years. But since the fund’s inception in September 2010, it’s the best-performing Vanguard ETF of all.
How this Vanguard ETF became a nine-bagger
An initial investment of $10,000 in the Vanguard Russell 1000 Growth ETF in 2010 is now worth around $93,260. How did this Vanguard ETF become a nine-bagger (and then some) in only 14 years? I think there are four key reasons behind its success.
VONG Total Return Level data by YCharts
Most importantly, many of the stocks in the Vanguard Russell 1000 Growth ETF have delivered exceptional gains since 2010. Its current top six holdings skyrocketed by at least 1,000% during the period. Nvidia’s shares are up a staggering 48,700%.
Regular rebalancing has also helped. Stocks that didn’t perform well fell out of the Russell 1000 Growth Index, and therefore out of the Vanguard ETF’s portfolio. Stocks that soared higher earned greater weighting.
Dividends played an important role, too. Without dividends reinvested, the Vanguard Russell 100 Growth ETF would have turned an initial $10,000 investment into around $79,200. That’s still a great return, of course, but it’s much lower than the $93,260 an investor would have made with dividends included.
Finally, we can’t leave out the ETF’s low costs. Vanguard is known for its low expense ratios. The Vanguard Russell 1000 Growth ETF is no exception, with an annual expense ratio of only 0.08%. The average expense ratio for similar funds is more than 11 times higher, at 0.94%.
Is the Vanguard Russell 1000 Growth ETF a smart pick now?
There’s no guarantee the Vanguard Russell 1000 Growth ETF will be able to continue delivering such impressive gains. Valuation could become problematic, since the average stock in the ETF’s portfolio trades at a price-to-earnings ratio of 36.2.
It’s possible that this Vanguard ETF could experience considerable volatility in the future. The ETF’s price has plunged more than 20% three times over the last six years.
However, I think the ETF is still a smart pick for long-term investors. I wouldn’t bet on this Vanguard fund becoming a nine-bagger again over the next 14 years. But the factors that have made it such a big winner since 2010 should help it outperform over the next decade and beyond.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
