Three Vanguard ETFs Poised for Outsized Gains

Core Viewpoint - Growth stocks are expected to continue leading the market, particularly with the ongoing advancements in artificial intelligence (AI), presenting potential investment opportunities in top exchange-traded funds (ETFs) [2]. Group 1: Vanguard Growth ETF - The Vanguard Growth ETF (VUG) focuses on the growth segment of the S&P 500, excluding value-oriented stocks, and includes 160 top growth companies [3]. - The ETF has delivered an average annual return of 17.4% over the past decade and 31.6% over the last three years [4]. Group 2: Vanguard Mega Cap Growth ETF - The Vanguard Mega Cap Growth ETF (MGK) targets U.S. megacap growth stocks, holding 66 stocks with the smallest market capitalization just below $70 billion [5]. - Approximately 70% of the portfolio is invested in technology stocks, with significant exposure to leading AI stocks, despite Amazon and Tesla being classified as consumer discretionary [6]. - The ETF has achieved an average annual return of 18.3% over the past decade and 33.2% over the last three years [6]. Group 3: Vanguard Information Technology ETF - The Vanguard Information Technology ETF (VGT) has been the best performer over the past decade, with a cumulative return of 691%, translating to an average annual return of nearly 23% [7]. - The ETF focuses exclusively on tech stocks, with top holdings including Nvidia, Apple, and Microsoft, which together account for 45% of the portfolio, with Nvidia alone representing over 18% [8]. - Despite its strong performance, the ETF does not include some major AI stocks like Alphabet and Amazon [8]. Group 4: Investment Strategy - These Vanguard ETFs are positioned to outperform if growth stocks maintain their market leadership, particularly in the context of AI advancements [9].