Meet the Only Vanguard ETF That Has Turned $10,000 Into $93,000 Since 2010 – The Motley Fool

Vanguard sells 86 exchange-traded funds (ETFs). You can buy almost any type of Vanguard bond or stock ETF.

30 Vanguard ETFs have returned at least 20% year-to-date. But with stocks and bonds soaring, that's not that difficult. More importantly, how have these funds performed over the long term?

If you're looking for the best of the best, one member of the Vanguard family deserves the award. Introducing the only Vanguard ETF that has turned $10,000 into more than $93,000 since 2010.

Better than S&P500

When many people think about the stock market, S&P500 It comes to mind right away. That's understandable. The index includes the 500 largest companies in the United States, many of which are well known. When the S&P 500 index rises, so does the overall stock market.

However, the biggest winner among Vanguard ETFs is not the S&P 500 fund. Instead, it is Vanguard Russell 1000 Growth ETF (Von -2.10%). This Vanguard ETF seeks to track the Russell 1000 Growth Index. The index features growth stocks that are members of the Russell 1000, which includes approximately 1,000 of the largest U.S. companies and represents approximately 93% of all U.S. stocks.

The Vanguard Russell 1000 Growth ETF holds 394 stocks and has a median market capitalization of $1.4 trillion. Top 7 holdings — apple, microsoft, Nvidia, Amazon, meta platform, Alphabet class Aand Alphabet class C –Accounts for approximately 51.5% of the ETF's portfolio.

This ETF is the third best performing Vanguard ETF over the past five years and second best performing over the past 10 years. However, since the fund's creation in September 2010, it has been the best-performing Vanguard ETF.

How this Vanguard ETF became a nine bagger

Your initial investment of $10,000 in the Vanguard Russell 1000 Growth ETF in 2010 is now worth approximately $93,260. How did this Vanguard ETF become a ninebagger (and then some) in just 14 years?I believe there are four main reasons behind its success.

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Most importantly, many of the stocks in the Vanguard Russell 1000 Growth ETF have delivered extraordinary gains since 2010. Our top six current holdings have soared at least 1,000% during this period. Nvidia stock is up an astonishing 48,700%.

Regular rebalancing also helped. Stocks that did not perform well were removed from the Russell 1000 Growth Index and therefore from the Vanguard ETF portfolio. Stocks that have soared have become more weighty.

Dividends also played an important role. Without dividend reinvestment, the Vanguard Russell 100 Growth ETF would have turned your original $10,000 investment into approximately $79,200. Of course, that's still a big profit, but it's much lower than the $93,260 investors would have earned, including dividends.

Finally, the low cost of ETFs cannot be ignored. Vanguard is known for its low expense ratios. The Vanguard Russell 1000 Growth ETF is no exception, with an annual expense ratio of just 0.08%. The average expense ratio for similar funds is 0.94%, more than 11 times higher.

Is the Vanguard Russell 1000 Growth ETF a smart choice now?

There is no guarantee that the Vanguard Russell 1000 Growth ETF will continue to generate such impressive returns. Valuation could be an issue, as the average stock price of the ETF's portfolio has been trading at a price-to-earnings ratio of 36.2 times.

This Vanguard ETF may experience significant volatility in the future. The ETF's price has fallen more than 20% three times in the past six years.

However, I think ETFs are still a smart choice for long-term investors. I wouldn't bet on this Vanguard fund becoming a nine-bagger again in the next 14 years. But the same factors that made the company such a big winner since 2010 should help it outperform over the next decade and beyond.