Prediction: These 2 Vanguard ETFs Will Beat the S&P 500 in 2025

The S&P 500 has been a solid benchmark that has produced annualized double-digit returns for many years. However, it’s possible for investors to outperform the S&P 500. Investors who want to outperform the index with individual stocks can start by looking within the index. Any index has individual stocks that have outperformed it since indices like the S&P 500 also contain underperforming stocks.

However, you don’t have to pick individual stocks to beat the S&P 500. There are some Vanguard ETFs that look ready to outperform the S&P 500 in 2025. These ETFs have outperformed over the long run, and that trend should continue.

Vanguard Growth Index Fund ETF (VUG)

The Vanguard Growth Index Fund ETF (NYSEARCA:VUG | VUG Price Prediction) is the first fund that is likely to outperform the S&P 500. They’re pretty much even to start the year, but a rally from big tech should help VUG take the lead.

VUG has delivered an annualized 17.2% return over the past five years and has an annualized 10-year return of 15.8%. Its portfolio mainly consists of the Magnificent Seven stocks, and its top 10 holdings make up 61% of its total assets. VUG has 51.6% of its assets in the tech sector.

The fund is also very affordable. It only has a 0.04% expense ratio that goes along nicely with the fund’s 0.42% SEC yield. The yield alone covers the expense ratio, and you can also get steady long-term returns if VUG sticks with its historical trends.

Vanguard Information Technology ETF (VGT)

The Vanguard Information Technology ETF (NYSEARCA:VGT) is another Vanguard ETF that is likely to outperform the S&P 500 this year. Just like VUG, this ETF also has a strong focus on the Magnificent Seven stocks. The fund’s top 10 holdings make up 60% of its total assets. VGT has 25 holdings that are all in the tech sector.

It’s been a good formula for VGT’s success. The ETF’s shares have an annualized 19.5% return over the past five years and an annualized 10-year return of 20.8%. The fund has a 0.09% expense ratio and a 0.47% SEC yield. 

VGT is roughly flat to start the year, but that’s largely due to the market’s reaction to DeepSeek. While the S&P 500 has a year-to-date lead, VGT has had a higher return over the past year and over the past five years.