Three Vanguard ETFs Set for Significant Returns
Growth ETFs are projected to keep outperforming in the coming year.
For most of the last twenty years, growth stocks have been a driving force in market advancement, and it seems the next decade may follow suit, particularly with artificial intelligence (AI) still at a relatively early stage. Conversely, the recent market dip might actually present a good opportunity to invest in some top exchange-traded funds (ETFs).
Here are three Vanguard ETFs that could see notable gains in the next few years.
Vanguard Growth ETF
Vanguard Index Fund – Vanguard Growth ETF
Today’s changes
(2.06%) $9.67
current price
$479.59
Key data points
Market capitalization
billion dollars
daily range
$474.00 – $480.12
52 week range
$316.14 – $505.38
volume
5.1K
average volume
0
gross profit
0.00%
dividend yield
Not applicable
If growth stocks keep pushing the market up, the Vanguard Growth ETF (VUG +2.06%) should be a solid investment option. This fund predominantly focuses on companies in the growth sector, mirroring the S&P 500 but excluding value stocks, which allows for more investment into approximately 160 top growth firms.
This ETF has consistently performed well, with an average annual return of 17.4% over the past decade and 31.6% over the last three years up to September.
Vanguard Mega Cap Growth ETF
Vanguard World Fund – Vanguard Mega Cap Growth ETF
Today’s changes
(2.24%) $8.92
current price
$406.13
Key data points
Market capitalization
billion dollars
daily range
$400.30 – $406.24
52 week range
$262.65 – $426.80
volume
135K
average volume
0
gross profit
0.00%
dividend yield
Not applicable
If your interest lies solely in U.S. mega-growth stocks, the Vanguard Mega Cap Growth ETF (MGK +2.24%) is ideal. This ETF comprises only 66 stocks, with the smallest stock market cap just shy of $70 billion.
A significant portion of the portfolio—almost 70%—is in technology stocks, not counting the ten largest ones, which include Amazon and Tesla categorized as consumer discretionary stocks. This ETF provides a focused investment on leading U.S. AI players.
Historically, it has delivered an average annual return of 18.3% over the past decade and 33.2% during the last three years.
Vanguard Information Technology ETF
Vanguard Information Technology ETF
Today’s changes
(2.42%) $17.41
current price
$736.30
Key data points
Market capitalization
billion dollars
daily range
$723.29 – $736.48
52 week range
$451.00 – $806.99
volume
258K
average volume
0
gross profit
0.00%
dividend yield
Not applicable
The Vanguard Information Technology ETF (VGT +2.42%) stands out as one of Vanguard’s top performers, boasting a cumulative return of 691% over the last decade, averaging nearly 23% annually, and a 34.8% annualized return for the previous three years.
This ETF is entirely devoted to tech stocks, with its top holdings including Nvidia, Apple, and Microsoft, which together constitute 45% of its portfolio—Nvidia alone makes up more than 18%. While this ETF is tech-centric and likely to continue doing well, it does lack inclusion of some major AI players like Alphabet and Amazon.
Conclusion
Assuming that growth and tech stocks keep spearheading market advancements, all three mentioned Vanguard ETFs seem well-positioned for success. They feature an overweight allocation to large-cap tech, backed by solid long-term performance records.
That being said, I’d suggest picking one of these ETFs for investment. Given their similar nature, investing in all three may not yield diversification benefits. Personally, I lean towards the Vanguard Mega Cap Growth ETF, as it provides exposure to top AI stocks while maintaining a concentrated portfolio.
Additionally, I advocate for dollar-cost averaging as a strategy when investing in ETFs. By consistently allocating a set amount of money each month—regardless of market conditions—you can build wealth over time. Sure, this approach won’t make you wealthy overnight, but it can certainly facilitate a comfortable retirement.
For instance, if you invested $1,000 monthly in one of these ETFs and achieved an average annual return of 15% (which is below the 10-year average), you could amass over $5.6 million in 30 years, with 94% of that stemming from gains.
