Prediction: These 3 Growth ETFs Could Crush the S&P 500 Over the Long Term

Key Points

• Growth ETFs only contain stocks with the potential for above-average returns.

• While these funds can carry more risk, some investments are more protected against volatility than others.

• Some growth ETFs have more than doubled the S&P 500 over the past decade.

• 10 stocks we like better than Vanguard Information Technology ETF ›

The S&P 500 index (SNPINDEX: ^GSPC) is a powerhouse, earning total returns of nearly 242% over the last 10 years, as of this writing. While investing in index-tracking funds like an S&P 500 ETF can be a great way to mitigate risk, growth stocks and exchange-traded funds (ETFs) can help supercharge your earnings over time.

Growth stocks are from companies poised for above-average earnings, and a growth ETF is a fund that only contains these types of stocks. While nobody can say for certain how any investment will fare over time, there's reason to believe these three ETFs will outperform the S&P 500 going forward.

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1. Schwab U.S. Large-Cap Growth ETF

The Schwab U.S. Large-Cap Growth ETF (NYSEMKT: SCHG) contains 197 large-cap stocks across 10 industries -- though close to half of its holdings are from the technology industry.

Large-cap stocks are those from companies with a market capitalization of at least $10 billion, making them some of the largest and strongest organizations in the world. Because this ETF only contains large-cap stocks, it can somewhat limit your risk while still taking advantage of the growth these stocks have to offer.

This ETF has a history of beating the market, earning total returns of close to 394% over the last 10 years compared to the S&P 500's 242% in that time. In other words, if you'd invested $10,000 a decade ago, you'd have close to $50,000 versus $34,000 in total.

^SPX data by YCharts

Keep in mind that past performance doesn't predict future returns. Even though this ETF has a track record of outperforming the S&P 500, that doesn't guarantee it will continue to do so.

However, because this is a growth-focused fund that only contains stocks chosen specifically for their growth potential, there's a good chance that over decades, it will continue outperforming the market.

2. iShares Core S&P 500 Growth ETF

The iShares Core S&P 500 Growth ETF (NYSEMKT: IVW) is similar in some ways to the Schwab fund, except it only contains high-growth companies that are listed in the S&P 500.

Like the previous ETF, all of the holdings within this fund are large-cap stocks. However, making it into the S&P 500 is an even higher bar, as this index maintains strict requirements for entry and is limited to 500 companies. Because only the strongest companies are listed in the S&P 500, the stocks in this fund are among the most likely to recover from economic downturns.

While it's earned slightly lower returns compared to the Schwab Large-Cap Growth ETF -- 335% total returns over 10 years -- this ETF is still a powerhouse that's outperformed the S&P 500.

^SPX data by YCharts

The iShares Core S&P 500 Growth ETF could be a good fit for those looking to limit risk while still earning above-average returns. Although the stocks in this ETF are industry-leading titans, they're still poised for significant growth and could substantially beat the market over time.

3. Vanguard Information Technology ETF

If you're comfortable with somewhat increased risk for the chance at earning explosive returns, a tech-focused ETF -- like the Vanguard Information Technology ETF (NYSEMKT: VGT) -- could be a fantastic addition to your portfolio.

This ETF only includes stocks from the tech industry, which is a sector known for sky-high earnings. The three largest holdings are Nvidia, Microsoft, and Apple, but it contains over 300 other stocks from all corners of the tech space.

When it comes to performance, this ETF runs laps around the S&P 500. It's earned total returns of close to 630% in the last 10 years, and if you'd invested $10,000 a decade ago, you'd have close to $73,000 by today.

^SPX data by YCharts

Before you buy, though, be sure you're comfortable taking on higher levels of risk -- especially in the short term. The tech sector is often incredibly volatile, and during previous market slumps, this ETF has been hit hard. It's wise to avoid investing any money you may need in the next five years or so, and plan on holding your investment for the long haul despite any short-term turbulence.

Also, this ETF shouldn't be the only investment you own. Investing in only one industry can be dangerous, so double-check that the rest of your portfolio contains at least 25 to 30 stocks (or one or two well-diversified ETFs) to limit risk.

It's impossible to say how any investment will fare over time, but these three ETFs are focused on growth and have a long history of outperforming the market. The longer you stay invested, the more you can potentially earn.

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Katie Brockman has positions in Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.