These Vanguard ETFs have been performing relatively well, even as the stock market has been erratic during the last five years.

During that time period, the market concluded the year down twice, in 2018 and 2022. During that time, investors witnessed a pandemic, two bear markets, and a technology bubble.

They also witnessed the end of the world’s longest bull market.

Given the various ups and downs during this five-year period, it would be interesting to see which Vanguard exchange-traded funds (ETFs) performed the best on an annualized basis.

It may provide you with a better understanding of which sections of the market have been the most robust, as well as guidance on which funds may help you accomplish long-term goals such as retiring a millionaire.

Vanguard Information Technology ETF (VGT)

The Vanguard Information Technology ETF has not been the best-performing Vanguard ETF in the long run, but it has had the highest five-year return.

As the name implies, this ETF covers equities in the IT sector, although it is broader than most technology ETFs.

It replicates the MSCI US IMI 25/50 Information Technology Index, which contains around 365 stocks from large-cap to small-cap technology companies.

It is market capitalization-weighted, so larger companies are more represented, but there are screening and caps to offer diversification.

Furthermore, it concentrates on IT hardware, software, technological equipment, and consultancy organizations while omitting communication services companies such as Meta Platforms and Alphabet. Apple, Microsoft, and Nvidia are the top three holdings.

The Vanguard Information Technology ETF has had an annualized return of 17.2% over the last five years, which is the best in the product family. Its 10-year average return is 18.9%, and it has returned 11.7% each year since its launch in 2004.

Vanguard Russell 1000 Growth ETF (VONG)

The Vanguard Russell 1000 Growth ETF has been the second-best performer among broad index funds over the last five years.

This one may come as more of a surprise than the first, given it is not exactly a large-cap growth ETF, which dominated during the most recent bull market.

With 512 holdings, the fund tracks the Russell 1000 Growth Index, which includes both large- and mid-cap growth stocks. Apple, Microsoft, and Amazon are the three largest holdings.

Through November 20, this ETF had a five-year annualized return of 12.8%.

It has had a 14.9% average annual return over the last ten years and a 14.7% annual return since its launch in 2010.

As shown in the graphic below, it outperformed the Vanguard S&P 500 Growth ETF over five and ten years.

It has a more diverse mix of growth stocks, aiding it throughout this bad market when large caps have suffered.

Vanguard Dividend Appreciation ETF (VIG)

As the next-best-performing Vanguard broader market ETF over the last five years, the Vanguard Dividend Appreciation ETF (VIG -0.89%) may surprise some.

It’s not your average ETF leading the markets, but these aren’t your typical times.

Dividend stocks have been among the greatest performers in recent years, and this is a one-of-a-kind ETF that looks out not only solid dividend stocks but also stable companies with a track record of growth.

The ETF tracks the S&P U.S. Dividend Growers Index, which comprises businesses that have increased dividend distributions for at least ten years in a row, minus the top 25% of equities with the highest yields.

This last step may appear counterintuitive: why would you exclude the highest-yielding stocks?

The goal is to eliminate the possibility of dividend trap stocks that pay out higher yields than they can sustain.

This helps to ensure that the portfolio contains consistent, reliable growers.

UnitedHealth Group, Johnson & Johnson, and Microsoft are the three most significant holdings in the portfolio, which consists of 289 equities.

Over the last five years, the ETF has outperformed the S&P 500 with an average annual return of 12.5%. It has returned 12.5% annually over the last ten years and 9.4% since its debut in 2006.

Can They Turn You Into a Millionaire

These three funds have all outperformed the market over the last five years, and two of them have outperformed the broader market during the last ten years.

The Dividend Appreciation ETF has trailed the S&P 500 over the last decade, but it provides some support during bear markets, as it has been almost flat over the past year through November 30 and delivers solid dividend income.

While none of these funds has a 20-year track record, the Vanguard Information Technology ETF comes the closest, with an average annual return of 11.7% since its launch in 2004.

For the sake of argument, if you invested $30,000 in that ETF 18 years ago and contributed $100 per month, you would have around $322,000 now. That won’t make you a billionaire, but when you factor in your 401(k) plan and other retirement funds, you might be close.

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