This Vanguard ETF Consistently Beats the S&P 500. Here's Why More Outperformance Is Possible.
2026-07-27 03:09
•Ryan Vanzo •The Motley Fool
••••• •• Axe Capital view
Why Vanguard's Growth ETF Keeps Beating the S&P 500
Vanguard's Russell 1000 Growth ETF has outperformed thanks to its tech-heavy, AI-focused portfolio, but concentration risk is real.
The Vanguard Russell 1000 Growth ETF (VONG) has consistently beaten the S&P 500 by focusing on large-cap growth names, many tied to AI innovation. This strategy delivered strong returns—an average 18.5% annually over the past decade versus around 15% for the S&P 500 ETF (VOO). But the catch is concentration risk: nearly 70% of its holdings are tech companies. For South African investors, this is a reminder to be wary of relying heavily on global tech exposure, especially when the rand slides against the dollar—tech stocks tend to be priced in USD, making them more expensive locally. On the JSE, Naspers and Prosus provide indirect exposure but come with their own valuation quirks and currency sensitivities. If global tech stumbles or China regulations deepen, VONG’s performance could quickly reverse and drag down rand-based returns. For now, growth via innovation is compelling but don’t overlook diversification and FX impact. this is just my opinion and not financial advice
I would watch VONG for tactical exposure but keep it under 10% of international allocations, balancing with rand-hedged assets like Naspers or commodity-linked plays to offset currency risks.
- VONG
- USD/ZAR
- Naspers
- Global tech sector selloff
- Rand depreciation against USD
6/10
The Vanguard Russell 1000 Growth ETF (VONG) has outperformed the S&P 500 by approximately 1.37 percentage points annually since inception and 3 percentage points over the past decade, primarily due to its heavy concentration in large-cap growth and AI stocks. However, this outperformance carries concentration risk, as nearly 70% of holdings are tech companies, meaning sector weakness could quickly reverse gains.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Ryan Vanzo
Categories: Equities, Earnings, Technology, AI, Semiconductors
Tickers: VONG, VOO
Sentiment: Positive - Demonstrated consistent outperformance with 16.84% average annual returns since inception versus 15.03% for S&P 500 ETF, and 18.48% over the past decade. Strong holdings in high-growth AI companies with impressive 33.7% average earnings growth. Described as 'one of the best investment vehicles for long-term investors' with rock-bottom 0.03% expense ratio and solid 15.03% average annual returns since inception, providing diversified exposure to 500 largest U.S. companies.
Keywords: ETF performance, growth stocks, AI stocks, concentration risk, large-cap investing, index funds
Insights:
- VONG: Positive: Demonstrated consistent outperformance with 16.84% average annual returns since inception versus 15.03% for S&P 500 ETF, and 18.48% over the past decade. Strong holdings in high-growth AI companies with impressive 33.7% average earnings growth.
- VOO: Positive: Described as 'one of the best investment vehicles for long-term investors' with rock-bottom 0.03% expense ratio and solid 15.03% average annual returns since inception, providing diversified exposure to 500 largest U.S. companies.