Vanguard’s VXF Captured 194% Over 10 Years While Holding Stocks the S&P 500 Ignores

Most index investors own the S&P 500 and think they own “the market.” They don’t. The S&P 500 covers roughly 500 of the largest U.S. companies, leaving out several thousand mid-, small-, and micro-cap stocks that make up a meaningful slice of total U.S. equity value. Vanguard Extended Market Index Fund ETF Shares (NYSEARCA:VXF) exists specifically to fill that gap.

What VXF Actually Tracks

VXF tracks the S&P Completion Index, which holds every U.S. stock not in the S&P 500. That makes it a direct complement to a fund like VOO rather than a standalone replacement. Investors who hold both in roughly the right proportions effectively replicate the total U.S. stock market, similar to what VTI delivers in a single fund.

The fund has been running since December 27, 2001, carries $85.1 billion in assets, and charges just 0.05% annually in expenses. Portfolio turnover sits at 12%, keeping it tax-efficient for taxable accounts.

Where the Returns Come From

VXF’s return engine is straightforward: underlying businesses grow earnings and cash flows over time, and the fund captures that compounding across thousands of companies. The sector mix skews toward Information Technology (18%) and Industrials (17%), with meaningful exposure to Financials (15%) and Healthcare (11%). Defensive sectors like Consumer Staples and Utilities together make up less than 5% of the fund, giving it a growth orientation.

The top holdings reflect that tilt. Names like Roblox, Snowflake, Cloudflare, and Marvell Technology appear in the top ten, alongside emerging plays in AI infrastructure and quantum computing. These are companies that haven’t yet grown large enough to enter the S&P 500, or were recently added. This is where VXF’s differentiation from VOO lives: it captures earlier-stage growth that large-cap indices structurally exclude.

Does the Performance Hold Up?

Over the past year, VXF returned 16%, slightly ahead of VOO’s 16%. The five-year picture tells a more important story: VXF gained 25% while VOO returned 78%. The gap reflects a period when mega-cap technology dominated returns in a way that structurally favors S&P 500 funds.

Over ten years, VXF gained 194% versus VOO’s 283%. VTI returned 214.7% over the same stretch, sitting between the two as expected.

The Real Tradeoffs

1. Small and mid-caps lag in large-cap bull markets. The five-year performance gap versus VOO is a direct consequence of a market environment where mega-cap companies drove the bulk of index returns. VXF holds none of Apple, Nvidia, Microsoft, or Amazon. When those names dominate, VXF structurally underperforms, and that divergence can persist for years.
2. Higher volatility than a large-cap fund. Smaller companies are more sensitive to economic slowdowns, credit conditions, and shifts in investor risk appetite. VXF’s holdings include early-stage and unprofitable companies, which amplifies drawdowns during risk-off periods. The 1.03% dividend yield provides minimal cushion compared to more income-oriented funds.
3. Position sizing matters more than ownership alone. VXF only replicates total market exposure when paired with VOO at the right ratio. Adding a small VXF sleeve without adjusting overall allocation can result in unintended overweights to small-cap volatility rather than a cleaner total-market profile.

Who This Fund Is Built For

VXF fits two scenarios: investors who already own VOO and want to approximate total U.S. market coverage, and investors who believe smaller companies are undervalued relative to large caps and want deliberate exposure to that segment. The fund’s 0.05% expense ratio makes the cost of either strategy negligible.

VXF is the right tool for genuine total-market coverage alongside VOO or a deliberate small- and mid-cap tilt. Anyone expecting it to outpace large-cap indices in a mega-cap-driven environment should know the recent underperformance has stretched across five-year periods, not just a few quarters.