In 2025, the S&P 500 is performing well, but the Vanguard Growth ETF is outperforming it with a gain of 19.2%, compared to the S&P 500’s 16.1%. The ETF invests aggressively in top growth stocks like Nvidia, Microsoft, and Amazon, leading to higher returns every year since its inception in 2004.

The Vanguard Growth ETF holds just 160 stocks, representing the top 85% of American companies by value in the CRSP U.S. Total Market index. The top five holdings have a combined market capitalization of $18 trillion, with a heavy focus on leading AI companies like Nvidia, Apple, and Microsoft. This exposure to AI technology has led to exceptional returns for the ETF.

With the AI industry booming, companies like Nvidia are experiencing high demand for their data center chips. Microsoft, Alphabet, and Amazon, among Nvidia’s top customers, are also seeing growth in their cloud divisions. This trend is likely to continue in 2026, driving further returns for the Vanguard Growth ETF.

The Vanguard Growth ETF has a compound annual return of 12.2% since 2004, outperforming the S&P 500. By rebalancing quarterly and focusing on high-quality growth stocks, the ETF avoids poor performers in sectors like utilities and energy. With a tech-heavy portfolio, the ETF is positioned to benefit from the AI-driven market in 2026.

Investors looking for growth opportunities may consider the 10 stocks identified by the Motley Fool Stock Advisor team, which exclude Vanguard Index Funds – Vanguard Growth ETF. These top stock picks have the potential to generate significant returns, outperforming the S&P 500 and other index funds. Consider joining Stock Advisor for access to the latest recommendations and market insights.

Read more at Nasdaq: Prediction: This Unstoppable Vanguard ETF Will Crush the S&P 500 (Again) in 2026