1 Vanguard ETF I Trust to Outperform the Market Long Term

When investors notation to the "market," it's usually the S&P 500. It tracks astir 500 of the largest American companies connected the banal market, and its show is often utilized arsenic a benchmark for determining whether a banal oregon ETF has performed "well."

Through the archetypal 3 months of the year, the S&P 500 declined by 4.6%. The Vanguard Growth ETF (NYSEMKT: VUG) -- which focuses connected large-cap maturation stocks -- performed worse (declining by astir 10.5%), but it's an ETF I spot to beryllium a semipermanent market-beater.

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Now mightiness not beryllium its champion stretch, but its semipermanent entreaty remains strong.

VUG isn't officially a tech ETF, but the maturation absorption has made it inherently tech-heavy. The tech assemblage accounts for astir 65% of VUG, acold up of the second-most-represented sector, user discretionary, astatine conscionable implicit 16%.

The precocious attraction successful tech hasn't worked retired good for VUG this year, but it has historically worked successful its favor. Since it deed the marketplace successful January 2004, VUG has consistently outperformed the S&P 500. It's up 792% compared to the index's 469% successful that span, and it has produced amended returns successful 17 of those 22 years. Below is however their returns person stacked up implicit the past decade:

Source: YCharts. Table by author.

Past results don't warrant aboriginal performance, truthful don't instrumentality this arsenic a warrant that the inclination volition continue. But the larger constituent is that maturation investing has rewarded investors who tin tummy the swings that often travel with it.

Right now, VUG is admittedly excessively top-heavy, with Nvidia and Apple unsocial accounting for implicit a 4th of the ETF, and the "Magnificent Seven" stocks accounting for implicit 56%. That's precise concentrated for a 151-stock ETF. I don't expect this being the norm implicit the agelong run, but it's worthy noting the risks that travel with that successful the adjacent future.

That said, I inactive expect tech to thrust VUG's growth, which is wherefore I'm assured successful its semipermanent outperformance. The tech satellite has industries that are comparatively aboriginal successful the trajectory that galore radical expect them to follow. Whether it's unreality computing, cybersecurity, fintech, quantum computing, oregon immoderate of the breakthroughs from the AI boom, galore apical tech companies are good positioned for continued growth.