Investors seeking higher returns may want to consider the Vanguard Growth ETF (VUG), which has outperformed the S&P 500 over the past decade with an average annual return of 16% compared to the S&P’s 14%. This ETF is heavily weighted in technology, with the “Magnificent Seven” stocks and Broadcom making up the majority of its holdings, positioning it as a bet on the long-term dominance of artificial intelligence (AI) in the market.
While the S&P 500 serves as a solid core holding for diversification, its inclusion of slower-growing sectors can dampen overall returns. The Vanguard Growth ETF, on the other hand, offers greater growth potential but comes with increased volatility—approximately 15% higher than the S&P 500. This volatility can lead to deeper drawdowns during market declines, as seen in previous years.
For portfolio managers and traders, incorporating growth stocks alongside a diversified index like the S&P 500 could enhance long-term returns, making the Vanguard Growth ETF a compelling option for those willing to accept higher risk for potentially greater rewards.
Source: fool.com