Why Vanguard Growth Index’s Performance Has Held Up Over Time

Key Morningstar Metrics for Vanguard Growth Index

• Morningstar Medalist Rating
  : Gold
• Process Pillar
  : Above Average
• People Pillar
  : Above Average
• Parent Pillar
  : High

Vanguard Growth Index, ETF ticker VUG

, effectively represents the contours of the large-cap growth market, while its low price tag helps remedy the shortcomings of its relatively concentrated portfolio.

The fund tracks the CRSP US Large Cap Growth Index, a market-cap-weighted bogy that captures the growth-oriented side of the large-cap market. Market-cap weighting is a cost-efficient way to size holdings because it harnesses the market’s consensus opinion of each stock’s relative value. Stocks that grow in size take up a larger share of the portfolio, while shrinking companies that may be struggling will have less importance. Generous buffers around the fund’s size and style borders improve the breadth of the portfolio and help tame turnover, leading to reduced trading costs.

Investors’ lofty expectations can lead to high valuations for growth stocks, which may not be justified. Few companies currently match the positive sentiment embedded in the stock prices of technology giants Microsoft MSFT, Nvidia NVDA, and Apple AAPL. These three stocks represent 34% of the portfolio together, while the fund’s top 10 holdings, which include other behemoths like Alphabet GOOG and Amazon.com AMZN, account for 65% of assets. That’s 12 percentage points more than the large-growth category norm, as of April 2026.

The market’s largest stocks heavily influence this fund’s return and risk. That can be a boon or a burden. With so much riding on the largest stocks in the market, the fund should do well when those stocks outperform and suffer when they fall. For example, the exchange-traded fund share class gained over 31% annualized since the beginning of 2023, 5.5 percentage points better than its average peer. But weak performance from the heaviest hitters spelled a 33% drawdown in the bear market of 2022, 3 percentage points more than its average peer.

Long term, investors should expect periods of outperformance when the largest stocks lead the charge. But those stocks can leave the portfolio vulnerable from time to time, potentially resulting in greater losses than better-diversified peers during broad declines.

Vanguard Growth Index: Performance Highlights

This fund’s performance has stacked up well against the category average since it adopted its current index in April 2013. From that point through May 2026, the fund’s ETF share class beat the category average by 2.3 percentage points annualized. Concentration at the top of the portfolio contributed to greater volatility over this time, but not enough to cut into its risk-adjusted advantage.

The fund’s market-cap weighting and size and style constraints lead to some sector biases and contrasting stock selection relative to its average category peer. These differences can contribute to performance discrepancies. Greater emphasis on the largest stocks like Nvidia and Alphabet helped recent performance. In aggregate, focusing on the largest growth stocks proved beneficial, but it should not be counted on as a reliable source of outperformance.

Despite some differences, the fund remains an excellent representative of the large-growth category and should perform well when growth stocks are in favor. Diversifying across the market’s largest and strongest helps control risk. Additionally, its low fee presents a durable advantage going forward.

Morningstar acquired the Center for Research in Security Prices, the provider of the index tracked by this fund, in February 2026. Morningstar analysts work independently from the index business, and the Morningstar Medalist Ratings for funds tracking CRSP indexes are based solely on the fund’s investment merits. Analysts do not provide qualitative ratings or opinions for investments managed by Morningstar or managed investments that track Morningstar indexes that incorporate discretionary inputs assigned by Morningstar employees on an ongoing basis, such as Morningstar Economic Moat Ratings or ESG Risk Ratings.