Vanguard’s Growth ETF: A Promising Investment Amid Market Volatility
What’s an 11-letter word that starts with “O” and perfectly captures a stock market pullback? The answer is “opportunity.” Forward-thinking investors should view current market volatility as an excellent chance to capitalize on market movements. If you’re not confident in your stock-picking skills, consider investing in an exchange-traded fund (ETF). I believe that purchasing one specific Vanguard ETF today could provide significant long-term benefits.
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Vanguard’s Top-Performing ETF
The Vanguard Russell 1000 Growth ETF (NASDAQ: VONG) stands out among the 90 ETFs offered by Vanguard. Since its launch in September 2010, the fund has generated an average annual return of 16.59% (as of February 28, 2025). It ranks second in terms of gains over the past decade within the Vanguard lineup and fourth over the last five years.
Although it can seem discouraging, the Vanguard Russell 1000 Growth ETF has not performed well recently, with a nearly 8% decline year-to-date and an approximate 11% drop from its peak in late 2024. I view this pullback as a temporary setback, providing investors with an excellent opportunity to buy at a lower price point.
Historically, these chances do not last long. This marks the eighth instance since its inception that the ETF has experienced a decline of more than 10% from its high. In seven of those occurrences, the ETF quickly rebounded.
Why This Fund is a Strong Choice
While historical performance is not a guarantee of future results, there are compelling reasons to consider buying the Vanguard Russell 1000 Growth ETF today. The ETF aims to mimic the performance of the Russell 1000 Growth Index, which comprises growth stocks from the Russell 1000 that represent the largest U.S. companies by market cap.
The Vanguard ETF currently holds 395 stocks, with top holdings including Apple, Microsoft, Nvidia, Amazon, and Meta Platforms. Together, these stocks account for roughly 44% of the fund’s portfolio. When including both classes of shares from Google parent Alphabet, the total rises to over 50%.
Despite recent downturns, I believe these companies will benefit from substantial growth potential, especially driven by advancements in artificial intelligence (AI) over the coming decade.
In the event that large-cap stocks beyond these giants start to outperform, the ETF’s market cap weighting will naturally adjust its portfolio, allocating more to rising companies and less to those lagging behind. This is one of the key advantages of investing in an index-based ETF.
Another benefit of the Vanguard fund is its low expense ratio. At just 0.07%, it significantly undercuts the average expense ratio of similar funds, which stands at 0.94%.
Important Considerations
Investment predictions can be uncertain, and mine could be proven wrong. While I believe the Vanguard Russell 1000 Growth ETF has great potential for long-term success, risks are inherent in any investment.
It’s important to note that the amount you invest will influence your outcomes. Simply purchasing a few shares of the Vanguard Russell 1000 Growth ETF likely will not provide life-changing returns. The level of investment necessary to achieve significant wealth will differ for each individual.
Moreover, my perspective is not that a short-term hold of two or three years in this Vanguard ETF will secure your financial future. A long-term strategy is essential.
It is possible, and perhaps even likely, that growth stocks may underperform in the short term. However, if your investing horizon is 10, 15, or even 20 years, the chances for impressive returns should improve considerably.
Should You Invest $1,000 in Vanguard Russell 1000 Growth ETF Now?
Before you decide to invest in the Vanguard Russell 1000 Growth ETF, consider this:
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former market development director and spokeswoman for Facebook, is also a board member. John Mackey, former CEO of Whole Foods Market, is a member as well. Keith Speights holds positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends these companies and has a disclosure policy in place.
The views expressed in this article are those of the author and do not necessarily represent the views of Nasdaq, Inc.
