Meet the Unstoppable Vanguard ETF Beating the S&P 500 and the Dow Jones in 2026
Small-cap stocks have benefited from a range of tailwinds this year.
In 2026, the Vanguard Russell 2000 ETF (VTWO) has outperformed both the S&P 500 and the Dow Jones Industrial Average, despite typically lagging behind these major indexes over the long term. The ETF tracks the performance of around 2,000 of America's smallest listed companies, which are less sensitive to geopolitical conflicts and benefit from favorable U.S. government policies.
The top five holdings in the Vanguard ETF represent just 1.8% of its portfolio value, reducing its reliance on a small number of stocks. However, the ETF's performance may be impacted negatively by interest rate hikes, as roughly 32% of its companies hold floating rate debt. Despite this, the ETF has delivered strong returns for investors in 2026, with certain companies experiencing significant gains due to surging demand for their products and services.
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