According to the Zhitong Finance APP, $S&P 500 Index (.SPX.US)$ it has performed strongly this year, having risen by 26% so far. This is more than double the average annual roi since 1957.

However, $Vanguard Growth ETF (VUG.US)$ its performance is even better, having increased by 32% year to date. This is due to the fact that, thanks to trends like ai, technology stocks are set to lead the s&p index higher in 2024, and this Vanguard ETF gives greater weight to technology stocks.

In fact, the Vanguard Growth ETF has a strong record of outperforming the s&p 500 since its inception in 2004, achieving average annual performance above this index.

The technology industry may continue to lead the large cap higher, with the Vanguard ETF expected to outperform the s&p 500 again in 2025.

Occupying an important position among the top growth stocks in the usa.

The Vanguard Growth ETF specifically invests in large growth companies in the usa. It holds 182 stocks from 12 different sectors, but the technology sector accounts for the largest share of its portfolio, at 58%.

In contrast, the s&p 500 index includes 500 different companies, with the technology sector making up 31.7% of its portfolio. This means the concentration of the Vanguard Growth ETF is much higher, which may lead to some additional risks during periods when technology stocks perform poorly.

The top three holdings of the Vanguard Growth ETF are all in the technology sector, accounting for more than one third of the entire portfolio's value. Its top five holdings also include$Amazon (AMZN.US)$and Meta. Their respective weights relative to the s&p 500 index are as follows:

These five companies are at the forefront of the ai revolution, dominating both the hardware and software aspects of this emerging industry. In 2024, their stocks had an average roi near 61%, thanks to the enormous demand for their ai datacenter chips.$NVIDIA (NVDA.US)$The stock price soared by 173%.

It is not surprising that the Vanguard Growth ETF achieved better returns in 2024 due to its higher weight in these five stocks compared to the s&p 500 index.

In addition to the top five, the etf also holds several other strong-performing stocks in the ai sector, including$Tesla (TSLA.US)$、 $Alphabet-C (GOOG.US)$And$Broadcom (AVGO.US)$。

However, this etf does not consist entirely of technology stocks.$Eli Lilly and Co (LLY.US)$、$Visa (V.US)$、$Costco (COST.US)$And.mcdonald's (MCD.US) The stocks are all among the top 20 holdings of this etf.

In 2025, it will surpass the s&p 500 again.

Since its establishment in 2004, the Vanguard Growth ETF has achieved an annual compound return of 11.4%, higher than the average annual return of the s&p 500 index at 10.1% during the same period.

In the past 10 years, the Vanguard Growth ETF has further accelerated its outstanding performance, with an annual compound return of 15.2%, while the s&p index has an average annual return of 13.2%.

If ai stocks continue to lead the market in 2025, this etf should once again surpass the s&p 500, as they account for a large portion of its portfolio. However, market adjustments could change that, as investors would then avoid momentum-driven stocks and flock to safer dividend payers.

$Vanguard Growth ETF (VUG.US)$ The performance has always been better than. $Vanguard Dividend Appreciation ETF (VIG.US)$ However, as seen in the chart below, growth etfs tend to decline much more during turbulent times, which means that in any year when large cap is weak, growth stocks easily underperform dividend stocks.

The s&p 500 is currently not cheap. Its pe ratio is 24.7, which is about 36% higher than the long-term average of 18.1 since the 1950s. Most of the premium comes from growth stocks— for example, the top five holdings of the Vanguard Growth etf all have pe ratios higher than the s&p index.

Editor/Somer