The Vanguard S&P 500 Growth ETF is well-diversified with 200 stocks, and offers high-growth opportunities.
It's sinking right now amid a volatile market, but it has outperformed most of Vanguard's ETFs over time.
With the market still in turmoil, there are several strategies investors can employ to make the best of the situation. Ideally, you have already set out your strategy and can sit back and relax regardless of what's happening in the markets, or you have some money ready to spend when stocks are plummeting.
Many investors run to safe stocks when there's market volatility, and the properly diversified individual portfolio already has those included. Another excellent strategy that can shield your portfolio and still provide growth opportunities is index investing. Index investing is passive and allows you to benefit from a large strata of stocks effortlessly.
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And there's a lot more to index investing than the standard S&P 500exchange-traded fund (ETF), which is no slouch itself. But if you're looking for a secure way to grow your money and take it up a notch, and you have $2,000 to spend right now, I highly recommend the Vanguard S&P 500 Growth ETF(NYSEMKT: VOOG). Here's why.
The cream of the crop
The Vanguard Growth ETF skims off the top of the S&P 500 to create an ETF that has the top U.S. growth stocks on the market. It tracks the S&P 500 growth index, which is a group of around 200 growth stocks.
Image source: Getty Images.
Two hundred is a lot less than 500, but that's still a lot of stocks. It's focused on growth stocks, so it's not fully diversified across factors like the S&P 500 is, but having 200 stocks in one place offers some instant diversification. Vanguard assigns it a risk factor of 4 out of 5, calling it "moderate to aggressive." Its average P/E ratio, for example, is 29, in comparison to the average S&P 500 P/E ratio of 25.
The ETF's largest holdings aren't high-risk growth stocks, though; they're large names you know like Apple, Amazon, and Nvidia. Its highest representation is, as you might imagine, information technology, which accounts for 37% of the total portfolio.
Index investing, but better
Because it's concentrated in growth stocks, the growth ETF has outperformed the regular S&P 500 over most periods of time. It's usually one of Vanguard's top-performing ETFs, but it's getting crushed this year along with many growth stocks. It's down 7% in 2025, making it one of Vanguard's worst-performing ETFs right now.
However, even inclusive of this decline, it's up 271% over the past 10 years and has an average annualized return of 14%, making it one of Vanguard's best ETFs to own over the past decade.
That's how the market typically goes. There are periods of decline and periods of growth, and you have to be able to sit with the declines and wait for times to get better. If you had invested $10,000 each in the growth ETF and the Vanguard S&P 500 ETF 10 years ago, you'd have significantly more from the growth ETF.
Some other benefits of investing in a Vanguard ETF are a trusted name and low expense ratio. Vanguard recently lowered its fees, and the growth ETF has an expense ratio of 0.07%.
Is now the right time to buy?
Although it can seem counterintuitive to invest in this ETF, or any stock for that matter, when it's declining, that's exactly the right time to take or add to a position. It's taking a step back, but historically, the market has always bounced back to much higher levels.
As the top growth stocks in the S&P 500, these 200 stocks are likely to rebound to new highs. They take the fall more severely, but they also enjoy higher gains under better conditions. As long as you can hold for the long term, your initial investment should be an excellent addition to a wealth-generating portfolio.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has positions in Apple and Vanguard Admiral Funds-Vanguard S&P 500 Growth ETF. The Motley Fool has positions in and recommends Amazon, Apple, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
