The Best Vanguard ETF to Buy and Hold for the Next Decade (It Has Significant AI Exposure)

With so many exchange-traded funds (ETFs) to choose from, building a long-term, buy-and-hold portfolio can feel overwhelming. There are growth-focused ETFs, dividend-focused ETFs, sector-specific ETFs, and broad-market ETFs. But for investors looking for a single fund that pairs an extremely low fee with deep exposure to America's most dominant companies, one stands above the rest: the Vanguard S&P 500 ETF (NYSEMKT: VOO).

The fund tracks the S&P 500 Index, giving investors fractional ownership in roughly 500 of the largest U.S. publicly traded companies through a single trade. And the market is clearly buying in. Net assets for this share class of this fund are now approaching $1 trillion -- a level no other ETF has ever reached. In fact, investors poured well over $100 billion of new money into the fund in 2025 alone.

So what makes this the best Vanguard ETF to own for the next decade? Two things stand out: how little it costs, and what's inside.

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What sets the fund apart

The fund's expense ratio is just 0.03%. For context, the average fund in its category charges around 0.67%. Even its closest peer, the SPDR S&P 500 ETF Trust (NYSEMKT: SPY), charges about 0.09% -- triple the cost. The gap may seem trivial, but on a meaningful investment held over a decade or two, those savings compound into real money.

Vanguard's structural setup helps, too.

The firm is essentially owned by its funds, which in turn are owned by its investors. That ownership model aligns Vanguard's incentives toward continually lowering costs over time. The fund's share-class structure has also historically helped minimize taxable capital gains distributions -- a quiet drag on long-term returns at less tax-efficient funds.

Then there's what investors actually own when they buy shares of the fund. The S&P 500 has become increasingly concentrated at the top, and that has worked in shareholders' favor recently. The fund's top five holdings -- Nvidia, Apple, Microsoft, Amazon, and Alphabet -- account for roughly a quarter of the entire fund. The top 10 combined add up to more than 36% of total assets.

That concentration, of course, cuts both ways. A few mega-cap stumbles could weigh on returns. But it also gives investors meaningful exposure to the companies most likely to lead in artificial intelligence (AI), cloud computing, and ultimately the next leg of the digital economy. To this end, information technology accounts for roughly 34% of the fund, with financial services and communication services rounding out the three largest sectors.

The case for the next 10 years

For long-term investors, the S&P 500's history is tough to ignore. Since 1957, the index has produced an average annual total return of about 10.3% with dividends reinvested. The trailing 10-year annualized return is even higher, at roughly 15%. And in the index's more than 50-year history, negative 10-year stretches have been rare.

The fund's deep tech exposure also lines up well with what may be the most important commercial story of the coming decade: AI.

Nvidia, the fund's biggest holding, supplies the chips powering much of the AI build-out. Microsoft and Alphabet run two of the most important cloud and software platforms for AI workloads. And Apple remains the world's largest consumer hardware company. Finally, Amazon's cloud computing business, Amazon Web Services (AWS), is the world's largest cloud infrastructure provider.

Owning the fund essentially gives investors a diversified bet on the broader AI economy -- without the headache of picking individual winners.

Still, no investment is risk-free. The fund's heavy tilt toward U.S. mega-cap tech means it could come under pressure if the AI build-out disappoints, or if rising rates and stretched valuations weigh on growth stocks. The fund also notably covers only U.S. large-cap stocks, with no international or fixed-income exposure. That said, the index's largest companies are multinational corporations with operations across many countries and markets.

For investors interested in buying VOO, how should they do it? For those looking to hedge against the risk of buying at the wrong time, dollar-cost averaging -- investing a fixed amount on a regular schedule, regardless of price -- may be the smartest approach. Spreading purchases over time helps even out entry points and takes some of the emotion out of investing when markets get volatile.

Ultimately, the combination of an extremely low fee and deep exposure to America's economic leaders -- backed by a multi-decade track record -- makes this Vanguard fund a compelling buy-and-hold candidate for the next 10 years.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.