As markets gear up for 2025, the S&P 500 has set a high bar. We explore four Vanguard ETFs – VOOG, VGT, VTI, and VOT – that analysts predict will not only keep pace but potentially exceed the benchmark, offering investors tailored strategies for growth, tech exposure, broad market stability, or overlooked mid-cap opportunities.
The S&P 500 delivered an exceptional return of around 23% in 2024, more than double its average annual gain of 10.6% since its establishment in 1957. This impressive performance has many investors wondering how to replicate or even surpass such gains in the year ahead. While the broader market indices are a solid foundation, several specialized Vanguard ETFs are being eyed for their potential to crush the S&P 500 in 2025.
This deep dive explores four distinct Vanguard offerings: the Vanguard S&P 500 Growth ETF (VOOG), the Vanguard Information Technology ETF (VGT), the Vanguard Total Stock Market Index (VTI), and the Vanguard Mid-Cap Growth ETF (VOT). Each presents a unique investment thesis, catering to different risk appetites and market outlooks, but all share a common goal: outperforming the benchmark.
The Growth Advantage: Vanguard S&P 500 Growth ETF (VOOG)
For investors focused on high-octane growth, the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) stands out. This ETF directly tracks the performance of the S&P 500 Growth Index, which selectively holds only 233 of the best-performing growth stocks from the regular S&P 500. In 2024, VOOG delivered a remarkable 38% return, significantly outpacing the S&P 500’s 23%.
VOOG achieves this by assigning much higher weightings to surging companies, particularly in the information technology sector. As artificial intelligence (AI) trends continue to build momentum, this ETF is well-positioned. The information technology sector accounts for 49.1% of VOOG’s weighting, compared to just 31.3% in the S&P 500. This concentration in market leaders like Nvidia, Apple, and Microsoft has been a key driver of its success.
Below is a comparison of the top five holdings in VOOG and their respective weightings against the broader S&P 500:
- Apple: 12.38% (VOOG) vs. 7.06% (S&P 500)
- Nvidia: 11.67% (VOOG) vs. 6.66% (S&P 500)
- Microsoft: 10.80% (VOOG) vs. 6.16% (S&P 500)
- Amazon: 6.66% (VOOG) vs. 3.80% (S&P 500)
- Meta Platforms: 4.31% (VOOG) vs. 2.46% (S&P 500)
The substantial difference in weightings explains VOOG’s outperformance. Since its inception in 2010, VOOG has delivered a compound annual return of 16.4%, comfortably exceeding the S&P 500’s 14.1% over the same period. While high-growth stocks can be more volatile during market downturns, the current momentum in AI and tech suggests another strong year for VOOG in 2025.
Targeting Tech: Vanguard Information Technology ETF (VGT)
For those seeking even more concentrated exposure to the technology sector, the Vanguard Information Technology ETF (NYSEMKT: VGT) is a compelling choice. This ETF holds 316 different technology stocks and has consistently outperformed the S&P 500 since its establishment in 2004. In 2024, VGT generated a 32% return, once again surpassing the S&P 500.
VGT’s portfolio is heavily weighted towards semiconductors, accounting for 29.5% of its total value. This strategic allocation has benefited from the explosive demand for AI hardware. Companies like Nvidia and Broadcom, crucial suppliers of AI chips and components, are significant holdings. Nvidia’s stock has soared over 800% since early 2023, while Broadcom doubled in value in 2024 alone.
Here’s a look at VGT’s top five holdings and their weightings compared to the S&P 500:
- Apple: 17.04% (VGT) vs. 6.86% (S&P 500)
- Nvidia: 14.94% (VGT) vs. 6.51% (S&P 500)
- Microsoft: 12.96% (VGT) vs. 6.27% (S&P 500)
- Broadcom: 5.82% (VGT) vs. 2.13% (S&P 500)
- Salesforce: 1.91% (VGT) vs. 0.61% (S&P 500)
With AI still in its nascent stages, many of these tech giants are expected to continue their strong performance. PwC predicts that AI could add $15.7 trillion to the global economy by 2030, presenting a massive financial opportunity for the companies within VGT’s portfolio. Since its inception, VGT has delivered a compound annual return of 13.7%, significantly outpacing the S&P 500’s 10.4% over the same period.
The Diversification Play: Vanguard Total Stock Market Index (VTI)
While growth and tech-focused ETFs offer high potential returns, some investors worry about the current valuations of tech stocks, especially those benefiting from AI. For those seeking significant diversification and a potentially softer landing in volatile markets, the Vanguard Total Stock Market Index (NYSEMKT: VTI) presents a compelling alternative for outperformance in 2025.
With over 3,600 holdings, VTI is a much more diversified option than concentrated growth funds. Historically, its performance has been similar to the S&P 500, but its breadth offers enhanced stability. This can be crucial if high-priced stocks face a correction while the broader market remains robust. VTI provides exposure to small-, mid-, and large-cap stocks, ensuring comprehensive market coverage.
One of VTI’s key advantages is its reduced concentration in the market’s most valuable companies. The top three tech giants – Apple, Microsoft, and Nvidia – account for 16.7% of VTI’s total weight. This is slightly lower than the 20.2% they comprise in the SPDR S&P 500 ETF, which tracks the S&P 500. This difference, while not massive, makes VTI a little less vulnerable to potential corrections in these high-valued holdings. With an exceptionally low expense ratio of just 0.03%, VTI is an attractive, passively managed fund for long-term investors seeking broad market exposure and reduced risk.
Unearthing Opportunity: Vanguard Mid-Cap Growth ETF (VOT)
Often overlooked, mid-cap stocks can offer a unique blend of diversification and growth potential. The Vanguard Mid-Cap Growth ETF (NYSEMKT: VOT) is positioned to capitalize on this segment, with predictions for it to outperform the S&P 500 over the next 12 months.
While the strict definition of mid-caps typically ranges from $2 billion to $10 billion in market value, VOT’s selection universe is based on the 70th and 85th percentile of the domestic equity market by market value. This means that as large-cap valuations have surged, the median market cap of VOT’s 121 holdings has expanded significantly, currently standing at $45.7 billion. This liberalization allows VOT to include companies that, while still “medium-sized,” benefit from robust growth trajectories.
VOT also boasts a higher exposure to the technology sector, with a 19.60% weighting, significantly more than the 12.60% in its stablemate, the Vanguard Mid-Cap ETF (VO). This tech weighting has already paid dividends, with VOT returning 72.6% over the past three years, outperforming both VO and the S&P MidCap 400 Index. Historically, mid-caps have outpaced both large and small counterparts for the 25 years ending June 30, 2025, demonstrating this feat with less volatility than small-caps, as reported by financial analyses on market segments such as those found on SSGA SPDR Midcap 400 Fact Sheet.
Choosing Your Vanguard Path to Outperformance
The quest to outperform the S&P 500 in 2025 offers various paths through Vanguard’s diverse ETF lineup. For aggressive growth investors, VOOG and VGT provide concentrated exposure to the high-flying tech and growth sectors, betting on continued momentum from trends like AI. Both funds have a strong historical track record of exceeding the S&P 500’s returns, albeit with higher volatility.
Conversely, VTI offers a more conservative, yet potentially outperforming, strategy through broad market diversification. It appeals to those concerned about overvalued segments and seeking stability in potentially uncertain economic conditions, providing a comprehensive basket of thousands of stocks at a minimal cost. Finally, VOT offers a distinct opportunity within the often-overlooked mid-cap segment, providing growth potential with relatively less volatility than small-caps, and benefiting from strategic tech exposure.
The choice among these Vanguard ETFs ultimately depends on an investor’s individual goals, risk tolerance, and market outlook. Each fund provides a thoughtfully constructed strategy that, under the right conditions, could help investors achieve returns beyond the benchmark in the coming year. For detailed historical S&P 500 performance data, resources like Slickcharts.com offer comprehensive insights into market trends and average annual gains.
