Meet the Vanguard ETF That Has Outperformed the Market Nearly 64% of the Time -- and Will Likely Continue Doing So

The Vanguard Morningstar Growth ETF (VUG) has consistently outperformed the S&P 500 over the past two decades. Since its inception in 2004, it has beaten the benchmark in 14 out of the 22 years. This impressive track record is due to its focus on large-cap growth stocks, with tech accounting for a significant portion of its holdings.

The "Magnificent Seven" stocks, which include Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta Platforms, and Tesla, make up over half of VUG's portfolio. While this heavy concentration in tech is a risk, it also provides the opportunity for continued outperformance as these companies continue to grow. VUG holds 84% of its 151 stocks within the S&P 500, with nine of its top 10 holdings overlapping.

This overlap gives VUG an edge over the market, as it benefits from the performance of the largest and most stable companies in the U.S. economy. While there will be periods of underperformance, the dominance of these growth-oriented companies suggests that VUG will likely outperform the S&P 500 in the majority of future years.