Latest news with #VanguardGrowthETF
Yahoo
5 days ago
- Business
- Yahoo
Less-Than-Expected Inflation in July: Growth ETFs to Gain?
The Consumer Price Index (CPI) increased 0.2% sequentially and 2.7% year over year, according to the Bureau of Labor Statistics (BLS). This compares with Dow Jones forecasts of 0.2% monthly and 2.8% annual growth, as quoted on CNBC. Core Inflation at Multi-Month Highs Excluding volatile food and energy prices, core CPI rose 0.3% in July and 3.1% annually, in line with monthly expectations but slightly above the 3% yearly forecast. The monthly core gain was the largest since January, while the annual pace was the highest since February. Federal Reserve officials typically view core inflation as a better indicator of long-term price trends. Market Reaction and Fed Rate Cut Speculation Following the CPI release, U.S. stock markets rallied, while Treasury yields were mixed. Investors boosted bets that the Federal Reserve could cut interest rates in September, with market pricing also indicating a possibility of another cut in rates in October. Fed officials are also concerned about labor market weakness, which could support the case for rate cuts. Analysts' Views Many economists believe tariff effects are likely to cause one-time price hikes rather than continued inflation, though the broad range of goods covered under Trump's tariffs has raised the chances of prolonged price pressures, as quoted on CNBC. Time for Growth Stocks? Growth stocks perform better in a low-rate environment. Low rates reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets. Growth stocks, with their potential to offer high returns, become more appealing to investors in this environment, driving up their prices. ETFs to Buy Against this backdrop, below we highlight a few top-ranked growth-based exchange-traded funds (ETFs) that can be tapped if the Fed starts cutting rates soon. Vanguard Growth ETF VUG – Zacks Rank #1 (Strong Buy) Invesco S&P 500 Pure Growth ETF RPG – Zacks Rank #2 (Buy) Invesco Large Cap Growth ETF PWB – Zacks Rank #1 Vanguard S&P 500 Growth ETF VOOG – Zacks Rank #1 iShares S&P 500 Growth ETF IVW – Zacks Rank #1 Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports Invesco Large Cap Growth ETF (PWB): ETF Research Reports Vanguard Growth ETF (VUG): ETF Research Reports iShares S&P 500 Growth ETF (IVW): ETF Research Reports Vanguard S&P 500 Growth ETF (VOOG): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
07-08-2025
- Business
- Yahoo
Fed to Cut Rates Ahead? Growth ETFs to Play
San Francisco Fed President Mary Daly said lately that the Federal Reserve may need to cut interest rates in the coming months due to a weakening labor market, despite near-term inflation pressures from tariffs. Labor Market Losing Momentum "The labor market has softened. Additional slowing would be unwelcome, as once it stumbles, it tends to fall quickly and hard," Daly said in a speech in Alaska, as quoted on Yahoo Finance. Recent data shows the U.S. added only 73,000 jobs in July, with the unemployment rate rising to 4.2%. Prior job gains in May and June were revised downward, dragging the three-month average to just 35,000 — an indication of slowdown in hiring. Tariffs to Raise Inflation Temporarily? While Daly indicated that tariffs will push inflation higher in the short term, she doesn't expect the effect to be lasting. Daly noted that underlying inflation, excluding tariffs, has been gradually falling and should continue to do so with the ongoing restrictive monetary policy and a slowing economy. Powell and Williams Offer Caution Fed Chair Jerome Powell last week emphasized that no decision has been made about a potential rate cut in September, pointing to the need to closely monitor the impact of tariffs. Meanwhile, New York Fed President John Williams said the job market remains 'solid' but admitted the downward revisions in hiring are concerning, as quoted on Yahoo Finance. Time for Growth Stocks? Growth stocks perform better in a low-rate environment. Low rates reduce the cost of borrowing, often needed to finance the expansion of companies. Lower rates reduce the attractiveness of fixed-income investments like bonds, leading investors to seek higher returns in the equity markets. Growth stocks, with their potential for high returns, become more appealing to investors in this environment, driving up demand and, consequently, their prices. ETFs to Buy Against this backdrop, below we highlight a few top-ranked growth-based exchange-traded funds (ETFs) that can be tapped, if the Fed starts cutting rates soon. Vanguard Growth ETF VUG – Zacks Rank #1 (Strong Buy) Invesco S&P 500 Pure Growth ETF RPG – Zacks Rank #2 (Buy) Invesco Large Cap Growth ETF PWB – Zacks Rank #1 Vanguard S&P 500 Growth ETF VOOG – Zacks Rank #1 iShares S&P 500 Growth ETF IVW – Zacks Rank #1 Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports Invesco Large Cap Growth ETF (PWB): ETF Research Reports Vanguard Growth ETF (VUG): ETF Research Reports iShares S&P 500 Growth ETF (IVW): ETF Research Reports Vanguard S&P 500 Growth ETF (VOOG): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
31-07-2025
- Business
- Yahoo
Is the Vanguard Growth ETF the Simplest Way to Consistently Beat the S&P 500?
Key Points Investing in top growth stocks has been an effective way to outperform the S&P 500 over time. Many top growth stocks have clear paths toward higher earnings, which can justify expensive valuations. By betting big on a handful of sectors and individual companies, the Vanguard Growth ETF can be volatile and prone to sell-offs. 10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF › Beating the S&P 500 (SNPINDEX: ^GSPC) over an extended period of time is no easy task. Just 8% of active large-cap U.S. equity stock funds outperformed the index over the last 20 years. One of the most effective ways to beat the index is to have a few winners that do really well. Buying a stock like Amazon 20 years ago would have produced monster returns, allowing investors to take an otherwise mediocre portfolio and transform it into an elite one. Having outsized positions in large-cap growth stocks has been the secret sauce for beating the S&P 500 over the last decade, which is exactly what the Vanguard Growth ETF (NYSEMKT: VUG) aims to do. Here's why the exchange-traded fund (ETF) could continue to do well over the long term. The Growth ETF gains are driven by just three stock market sectors The Vanguard Growth ETF has a 0.04% expense ratio compared to 0.03% for the Vanguard S&P 500 ETF (NYSEMKT: VOO), which is just a $1 difference for every $10,000 invested. So there's essentially a negligible cost to choose the Growth ETF over the S&P 500 ETF. As you can see in the following table, the Growth ETF has crushed the S&P 500 over the last decade -- largely thanks to outperformance periods in 2017, 2020, 2023, and 2024. 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 YTD Vanguard Growth ETF 3.3% 6.3% 27.7% (3.3%) 37% 40.2% 27.3% (33.2%) 46.8% 32.7% 10.5% Vanguard S&P 500 ETF 1.3% 12.2% 21.8% (4.5%) 31.4% 18.3% 28.8% (18.2%) 26.3% 25% 9% Data source: YCharts. YTD = year to date. You'll notice that the Growth ETF fell much more than the S&P 500 in 2022, but that decline was more than made up for with outsized gains in many other years. Even when factoring in the S&P 500's higher dividend yield, the total return for the Vanguard Growth ETF is up 353.4% over the decade compared to 264.2% for the Vanguard S&P 500 ETF -- which is the difference between turning $10,000 into $45,240 versus $36,420 with no extra effort. If the technology, communications, and consumer discretionary sectors continue to outperform the S&P 500, so will the Growth ETF. The Growth ETF has a combined weighting in these sectors of 80.1% compared to 53.3% for the S&P 500. So while the S&P 500 has become more concentrated in these sectors, the Growth ETF takes it to a whole new level by being drastically underweight in financials, healthcare, energy, consumer staples, materials, real estate, and utilities. Both sectors have roughly equal exposure to industrials -- which is cyclical and somewhat of a blend between growth, income, and value. Reinvesting excess profits rather than distributing them can accelerate earnings growth The Vanguard Growth ETF is betting big on just a handful of names, with roughly two-thirds of the fund concentrated in just 15 companies -- Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Eli Lilly, Visa, Mastercard, Netflix, Costco Wholesale, and Palantir Technologies. These companies have contributed a disproportionate amount of gains to the S&P 500 compared to the average S&P 500 holding. And since the Growth ETF is overweight in these names compared to the index, it has benefited even more from their outperformance. The valuations of many of these companies are significantly higher than they used to be, which may lead some investors to wonder how much longer their outperformance can last before they revert to the mean. While it's easy to look at the price action of these companies and say they are overvalued, a better question is to ask what is stopping these companies from continuing to beat the market? Or even more specifically, what's holding these companies back from growing earnings at an above-average rate, therefore justifying higher stock prices? At their core, what separates growth stocks from value stocks is capital allocation. A stodgy, mature business like Coca-Cola will sometimes acquire new drinks or invest in organic growth. But the opportunities are limited. So management prioritizes returning excess profits to shareholders through dividends, and to a lesser extent, stock repurchases, whereas many top growth stocks have compelling opportunities in artificial intelligence, cloud computing, robotics, e-commerce, media, networking, electronics, and more. These end markets have been lucrative for companies that can allocate capital effectively and innovate. Amazon is famous for taking cash flow and plowing it back into growth initiatives. Amazon's track record is riddled with failures, but also major successes -- such as becoming the market leader in cloud computing and continuing to expand its e-commerce empire. By investing in ideas and maintaining a strong balance sheet, Amazon can afford to take risks and ride out downturns. Investors aren't always happy with this risk-taking, as Amazon fell 25% or more from its all-time high three times in the last 10 years (February 2016, December 2018, and over 55% in December 2022). In sum, the price for outsized gains is often high volatility, which can work in favor of risk-tolerant investors with long-term time horizons. The Growth ETF remains a top buy now There's no guarantee that the Vanguard Growth ETF will continue to outperform the S&P 500, but it has been one of the simplest ways to beat the index. The outperformance hasn't been a fluke, as the index bets big on leading companies that pour resources into growing their future earnings rather than directly returning capital to shareholders. That strategy should continue to produce solid gains over the long term, but investors may want to temper their expectations in the near term, given elevated valuations. I expect the Vanguard Growth ETF to outperform the S&P 500 ETF over the next decade, making it a more attractive option for long-term investors. However, the Growth ETF could easily underperform the S&P 500 over the short term, so it's only worth approaching the fund if you have the time horizon needed to endure volatility. Should you buy stock in Vanguard Index Funds - Vanguard Growth ETF right now? Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $630,291!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,075,791!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Mastercard, Meta Platforms, Microsoft, Netflix, Nvidia, Palantir Technologies, Tesla, Vanguard Index Funds-Vanguard Growth ETF, Vanguard S&P 500 ETF, and Visa. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Is the Vanguard Growth ETF the Simplest Way to Consistently Beat the S&P 500? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
26-07-2025
- Business
- Yahoo
2 Unstoppable Vanguard ETFs That Consistently Beat the S&P 500 Index
Key Points The S&P 500 has delivered a reliable annual return of 10.5% since it was established in 1957 thanks to its diversified composition. Exchange-traded funds with a higher concentration of technology stocks have performed much better but also come with higher risk. Both the Vanguard Growth ETF and the Vanguard Mega Cap Growth ETF have a great track record compared to the S&P 500. 10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF › The S&P 500 is among the leading U.S. stock market indexes. It's home to 500 companies from 11 different sectors of the economy, and they have to meet very strict criteria before a special committee can grant them entry. This process ensures that only the highest-quality names make the cut. The S&P 500 has delivered a compound annual return of 10.5% (including dividends) since it was established in 1957, even after accounting for every sell-off, correction, and bear market along the way. Its steady returns and diverse composition are two key reasons experts, such as Warren Buffett, regularly encourage everyday investors to buy an S&P 500 index fund. But younger investors who have time on their side or those with a greater appetite for risk in general may want to explore other options with higher growth potential. After all, even a couple of extra percentage points per year can translate into life-changing amounts of money over a period of decades. Here are two high-growth Vanguard exchange-traded funds (ETFs) to consider. 1. The Vanguard Growth ETF The Vanguard Growth ETF (NYSEMKT: VUG) aims to track the performance of the CRSP US Large Cap Growth Index, which invests in the companies that make up 85% of the cumulative market capitalization of the CRSP US Total Market Index. That sounds complicated, but let me explain. The CRSP US Total Market Index holds all 3,537 companies listed on American stock exchanges. If we ranked them by market capitalization (value) from the largest to the smallest, the CRSP US Large Cap Growth Index would start at the very top and invest in every single name down the list until it captures 85% of the combined value of the 3,537 companies. The Vanguard Growth ETF holds only 165 stocks, which highlights the extreme concentration of wealth in the American corporate sector. In other words, 165 companies represent 85% of the total value of the entire stock market, while the remaining 3,372 companies account for the other 15%. The Vanguard ETF itself is also highly concentrated. Its top five holdings represent 44.2% of the value of its entire portfolio: Stock Vanguard Growth ETF Portfolio Weighting 1. Microsoft 11.76% 2. Nvidia 11.63% 3. Apple 9.71% 4. Amazon 6.53% 5. Meta Platforms 4.57% Data source: Vanguard. Portfolio weightings are accurate as of June 30, 2025, and are subject to change. ETF = exchange-traded fund. Those same five stocks represent just 26.9% of the value of the S&P 500. That difference in weighting is very important because over the last 10 years, for example, those stocks have delivered a median return of 833%. Simply put, any index or fund with a high exposure to those five stocks alone over the past decade probably outperformed the S&P 500. Unsurprisingly, the Vanguard ETF generated a compound annual return of 16.2% over the last 10 years, compared to just 12.8% for the S&P 500. Going back even further, the ETF has risen at a compound annual rate of 11.8% since it was established in 2004, beating the S&P, which has delivered an average annual return of 10.1% over the same period. That 1.7 percentage point difference might not sound like much at face value, but it would have made a big difference in dollar terms. Starting Balance (2004) Compound Annual Return Current Balance (2025) $50,000 11.8% (Vanguard ETF) $520,292 $50,000 10.1% (S&P 500) $377,140 Calculations by author. 2. The Vanguard Mega Cap Growth ETF The Vanguard Mega Cap Growth ETF (NYSEMKT: MGK) offers even higher exposure to tech titans and artificial intelligence (AI) giants such as Nvidia and Microsoft. It tracks the performance of the CRSP US Mega Cap Growth Index, which invests in the companies that make up 70% of the cumulative market cap of the CRSP US Total Market Index. If we revisit my earlier example, the CRSP US Mega Cap Growth Index would start investing in the largest stocks and go down the list until it captures 70% of the total value of the 3,537 companies in the CRSP US Total Market Index. As a result, the Vanguard Mega Cap Growth ETF holds just 69 stocks, so each name organically receives an even higher weighting than it would in the Vanguard Growth ETF. In fact, its top five holdings represent a whopping 50.3% of the value of its portfolio: Stock Vanguard Mega Cap ETF Portfolio Weighting 1. Microsoft 13.49% 2. Nvidia 13.34% 3. Apple 11.14% 4. Amazon 7.52% 5. Broadcom 4.81% Data source: Vanguard. Portfolio weightings are accurate as of June 30, 2025, and are subject to change. ETF = exchange-traded fund. The Vanguard Mega Cap Growth ETF has delivered a compound annual return of 13.4% since its inception in 2007, comfortably beating the S&P 500, which generated an average return of 10.2% per year over the same period. Over the past decade, specifically, the ETF grew at a blistering annual rate of 17%. Starting Balance (2007) Compound Annual Return Current Balance (2025) $50,000 13.4% (Vanguard ETF) $480,844 $50,000 10.2% (S&P 500) $287,235 Calculations by author. ETF = exchange-traded fund. A few things to keep in mind The technology sector has a weighting of 60.4% in the Vanguard Growth ETF and 63.9% in the Vanguard Mega Cap Growth ETF. While this high degree of concentration has clearly led to incredible returns, it also leaves investors exposed to significant risks. If stocks like Nvidia and Microsoft were to suffer steep corrections, both ETFs would likely underperform the S&P 500 for a period of time. Moreover, if emerging technologies, such as AI, robotics, and machine learning, fail to live up to expectations, a much broader group of stocks will be affected, which could trigger a more prolonged period of weakness for these Vanguard ETFs. Therefore, investors should buy these ETFs only as part of a diversified portfolio that includes other funds and individual stocks. This strategy could still lead to much better returns than investing in an S&P 500 index fund alone, but it will also provide some insulation if high-growth themes like AI suffer a setback. Should you buy stock in Vanguard Index Funds - Vanguard Growth ETF right now? Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 2 Unstoppable Vanguard ETFs That Consistently Beat the S&P 500 Index was originally published by The Motley Fool
Yahoo
19-07-2025
- Business
- Yahoo
1 Unstoppable Vanguard Fund That Can Turn $50,000 Into $1 Million
Key Points The Vanguard Growth Index Fund ETF charges minimal fees to its investors. At the same time, it gives them access to over 160 of the nation's best growth stocks. The fund can be an excellent investment to simply buy and hold for the long run. 10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF › Picking stocks and staying on top of them can turn into a time-consuming project. But if you don't want to do that, the good news is that a simple buy-and-hold investing strategy can yield great returns all on its own. As long as you diversify your position and focus on top growth stocks, it can be a way to drastically simplify your investing process while still potentially setting you up for some massive gains in the process. What if you were to invest $50,000 into an exchange-traded fund (ETF) that holds growth stocks and just let it sit there for years? If you simply mirror the market's long-run average return of 10%, then you'll more than double your money after a little over seven years. And the longer you stay invested, the larger your gains may end up becoming. One ETF that can give you exposure to some of the best growth stocks in the world and possibly enable you to turn a $50,000 investment into over $1 million is the Vanguard Growth Index Fund ETF (NYSEMKT: VUG). Why the Vanguard Growth Index Fund ETF is an ideal option for the long run Vanguard funds are generally terrific options for long-term investors because they charge minimal fees and usually have excellent diversification. The Vanguard Growth Index Fund is no exception. Its expense ratio is a minimal 0.04%, which is much lower than its yield of around 0.4% -- and the dividend is just a nice bonus. The main reason for investing in the fund is for its growth potential. The ETF focuses on the largest growth stocks in the U.S., and it had 166 holdings as of the end of May. Since it prioritizes growth, it's inevitable that tech will have a big slice of the ETF's portfolio -- that sector accounts for close to 60% of its holdings. That means that there will likely be some variability from one year to the next, but generally, having a significant exposure to tech should help the fund rise in value over the long haul. Big names such as Apple, Nvidia, and Microsoft are among its largest positions, since they are also among the most valuable companies in the world. How the ETF can turn $50,000 into $1 million Here's what the value of a $50,000 investment in the Vanguard fund could grow to over the long haul, if it ends up averaging the S&P 500's long-run average of 10%. Year 10% Growth 10 $129,687 15 $208,862 20 $336,375 25 $541,735 30 $872,470 35 $1,405,122 Data source: Calculations by author. It would take a little less than 32 years for the fund to grow to a value of more than $1 million under these assumptions. If, however, the actual annual return turns out to be more than 10%, then it would get there faster. But if the market slows down and the Vanguard fund grows at a rate of less than 10%, it will end up taking more than 32 years to get to the $1 million mark. Unfortunately, because it's impossible to be able to predict what kind of long-run growth rate the Vanguard fund will average, there's no way to definitely know whether a $50,000 investment in the ETF can ensure you end up with $1 million. But it certainly has the potential to do so. And with strong growth stocks in the fund and low fees, it can put you in a good position to outperform the market over the years. While you may not necessarily want to invest as much as $50,000 into a single ETF, this is the type of fund where a large investment of this size can make sense, given how diverse it is and the quality of stocks it holds. Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now? Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 1 Unstoppable Vanguard Fund That Can Turn $50,000 Into $1 Million was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
