This ETF has outperformed the S&P 500 handily over varied multi-year intervals.
Should you’re like many buyers, you both personal or need to personal the “Magnificent Seven” shares, that are Apple, Amazon.com, (Google dad or mum) Alphabet, (Fb dad or mum) Meta Platforms, Microsoft, Nvidia, and Tesla.
You may additionally need to personal firms that might turn into Magnificent-Seven-like — in different phrases, terrific development shares. However which firms are the subsequent nice investments? It may be arduous to know, which is why it is sensible to purchase a bundle of promising shares, spreading your danger and alternative round.
Picture supply: Getty Pictures.
Contemplate, due to this fact, investing within the Vanguard Development ETF (VUG -0.34%), which you are able to do with as little as $100. (To make clear, a single share just lately went for $463, so if you happen to solely had $100 to speculate, you’d want to purchase a fraction of a share, which some good brokerages can help you do.) An exchange-traded fund (ETF) is a fund that trades like a inventory.
Meet the Vanguard Development ETF
The Vanguard Development ETF tracks the CRSP U.S. Massive Cap Development Index, which is targeted on large-cap firms rising at a faster-than-average clip, and the ETF goals to ship roughly the identical returns, minus its low charges. Particularly, its expense ratio (annual price) is simply 0.04%, that means that you will be charged a whopping $4 per 12 months for each $10,000 you could have invested within the fund.
The ETF held 165 shares, as of June 30, per Vanguard, with 60% of belongings within the expertise sector, adopted by 19% within the shopper discretionary sector. Listed below are the highest 10 holdings, which collectively made up about 59% of whole belongings:
Inventory
Weight in ETF
Microsoft
11.76%
Nvidia
11.63%
Apple
9.71%
Amazon.com
6.53%
Meta Platforms
4.57%
Alphabet Class A
4.26%
Alphabet Class C
3.17%
Eli Lilly
2.87%
Broadcom
2.55%
Tesla
2.19%
Supply: Vanguard.com, as of June 30.
You’ll be able to see that each one the Magnificent Seven shares are there — and among the many high holdings. And on condition that these 10 holdings make up greater than half the ETF’s worth, it is clear that the opposite 155 shares will likely be comparatively minor holdings for the ETF — and its shareholders. Nonetheless, these high 10 firms are within the high 10 as a result of they grew to large sizes, and it isn’t loopy to let your winners run and hold profitable.
This ETF and its extra well-known fellow index fund, the S&P 500 index fund, are, like a lot of others, market-cap-weighted, that means that the larger the element firm, the extra affect it should wield on the index. That is why the highest 10 firms above make up a lot of the Vanguard Development ETF’s worth — as a result of they’ve such hefty market caps.
Should you’re available in the market for diversification with much less focus, you would possibly search for a superb equal-weighted ETF, such because the Invesco S&P 500 Equal Weight ETF, which holds every of its 500-some elements in roughly equal proportion. The Invesco equal-weight ETF’s top-10 holdings would, due to this fact, make up solely about 2% or 3% of the general ETF worth.
How has the Vanguard Development ETF carried out?
Here is how the Vanguard Development ETF would have rewarded you over a number of current intervals. I will examine its numbers to these of a low-fee S&P 500 index fund, too, and you will see that it outperformed the S&P index fund handily:
Time interval
Vanguard Development ETF
Vanguard S&P 500 ETF
Previous 3 years
21.22%
16.30%
Previous 5 years
16.47%
15.46%
Previous 10 years
16.58%
13.89%
Previous 15 years
17.00%
N/A
Supply: Morningstar.com, as of August 12, 2025.
There is no assure that it’ll all the time outperform, although, and it is good to do not forget that since development shares are inclined to fall more durable in market downturns, there could also be years when it actually underperforms. For instance, in 2022, when the S&P 500 ETF dropped by round 18%, the Vanguard Development ETF dropped by 33%. Ouch!
Nonetheless, long-term buyers have loved stable total positive factors, and it is not often good to give attention to anyone 12 months. So go forward and contemplate the Vanguard Development ETF in your growth-stock wants. However maybe complement it with another stable index ETFs.
Selena Maranjian has positions in Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Development ETF. The Motley Idiot has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Development ETF. The Motley Idiot recommends Broadcom and recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
