This Relentless Vanguard ETF Will Crush the S&P 500 in 2025

The Vanguard S&P 500 Growth ETF (VOOG) has consistently outperformed the broader S&P 500 index since its inception in 2010, delivering an average annual return of 16.3% compared to the S&P 500's 14.1%. As we look ahead to 2025, there are several reasons to believe that this ETF will continue to crush the index.

One of the key factors contributing to VOOG's outperformance is its higher weightings in technology stocks, which have been at the forefront of growth trends like artificial intelligence (AI). The ETF's top holdings include Nvidia, Apple, Microsoft, Meta Platforms, and Tesla, all of which are benefiting from AI-related developments. For instance, Nvidia, the largest position in the ETF, has seen its stock rocket higher by 490% over the last two years, thanks to AI-driven revenue growth (Vanguard, 2024).

The S&P 500 Growth index selects its holdings based on factors like momentum and sales growth of the underlying companies. This strategy allows the ETF to capture companies with strong performance and growth prospects. Almost all of the top 10 companies in the ETF are betting heavily on AI and experiencing strong growth as a result (Vanguard, 2024).

While the ETF is focused on growth stocks, it still offers diversification within that segment. It holds 208 of the best-performing growth stocks from the regular S&P 500, which helps to mitigate risk compared to investing in a single stock. This diversification is evident in the top 10 holdings, which represent 53.9% of the total value of the ETF and span various industries, including technology, consumer discretionary, and healthcare (Vanguard, 2024).

Another factor contributing to VOOG's outperformance is its lower expense ratio compared to many other ETFs. As of 2024, the ETF's expense ratio is 0.1%, which is significantly lower than the average expense ratio of 0.95% for similar ETFs (Vanguard, 2024). This lower expense ratio helps investors keep more of their returns, contributing to the ETF's overall competitiveness and accessibility.



As we look ahead to 2025, the ETF's concentration in AI-related stocks and its lower expense ratio position it well to continue outperforming the broader S&P 500 index. The relentless growth of AI and the ETF's diversified portfolio of growth stocks should drive strong performance in the coming year. Additionally, the ETF's low expense ratio will help investors keep more of their returns, further enhancing its competitiveness.

In conclusion, the Vanguard S&P 500 Growth ETF's consistent outperformance compared to the broader S&P 500 index can be attributed to its higher weightings in technology stocks, its focus on momentum and sales growth, its diversification within the growth segment, and its lower expense ratio. As we look ahead to 2025, these factors position the ETF to continue crushing the S&P 500, making it an attractive option for growth-oriented investors.