Vanguard's Growth ETF Has Returned About 18% a Year for a Decade. I'd Plan on Much Less Through 2030.

Shares of the Vanguard Morningstar Growth ETF (NYSEMKT:VUG) have had a good 2026. As I write, the fund trades near $90, up about 10% this year. That puts it about 3% below its Oct. 6 record close of $92.64.

The record caps a long run. With reinvested dividends, the fund's return has averaged about 18% a year for the last decade.

A buyer today, though, pays around 37 times the earnings of the companies in the fund. And that price matters a lot for what the next few years can bring.

I estimate $10,000 put in the fund today could climb to around $15,000 by Dec. 31, 2030. That's around 10% a year, before dividends.

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Big holdings, fast growth

The fund owned 147 growth stocks at the end of June, but a few of them carry most of the weight. Its 10 biggest holdings made up around 63% of assets, according to Vanguard. Nvidia (NASDAQ:NVDA) led with 12.6%, followed by Apple (NASDAQ:AAPL) at 11.7% and Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG) at 10.3%.

These three companies alone are around 35% of the fund, and each is still growing profits fast. Nvidia's non-GAAP (adjusted) earnings per share more than doubled, up 120% year over year to $2.22 for its fiscal second quarter of 2027 (ended July 26, 2026). Apple's earnings per share gained 29% to $2.02 for its fiscal third quarter of 2026 (ended June 27), but $0.11 of that came from tariff refunds. And Alphabet's second-quarter operating income grew 30%, with its operating margin widening to 34%.

Alphabet's earnings per share almost quadrupled to $9.11, too. But $6.26 of that came from a $99 billion gain on equity securities it holds, so operating income is arguably the better measure of the business.

Putting the whole portfolio's growth in perspective, Vanguard says the fund's stocks have grown their earnings around 32% a year, on average, over the past five years.

Can that pace hold?

I don't think it can, at least not for the fund as a whole. Earnings rising 32% a year double around every two and a half years, and the fund's largest companies are already massive.

Nvidia's adjusted net income was about $54 billion for its fiscal second quarter alone, more than double the $25 billion it made a year before. I don't think a business that size can keep doubling its profits every couple of years.

In my forecast, then, I'm assuming the fund's earnings rise around 15% a year through 2030. That's under half the pace of the past five years. But it's still fast enough to double earnings in around five years, and it gives the largest holdings room to slow without ruining the estimate.

Investors will probably pay less for those earnings

The other half of the forecast is valuation. Vanguard put the fund's price-to-earnings ratio at 35.6 at the end of June, using its stocks' earnings for the past year.

The fund's up around 4% since then, so a buyer today pays about 37 times the same earnings.

In other words, $10,000 in the fund today buys a claim on about $270 of the underlying companies' yearly earnings. If the earnings grow 15% a year from the 12 months through June to calendar 2030 (around four and a half years), they hit about $505.

I don't think investors will keep paying 37 times earnings by then. Instead, I'm assuming the price-to-earnings ratio slips to 30. That'd still be a premium over the 27.5 times earnings Vanguard listed for the Vanguard S&P 500 ETF in June.

Thirty times earnings of $505 is around $15,150. That's a rise of about 50% in a bit over four years. Reinvested dividends wouldn't add much, because the fund yields around 0.4%.

Of course, the forecast could miss in either direction. If earnings growth cools to 12% a year and the price-to-earnings ratio drops to 28, the same $10,000 would grow to only about $12,500.

In the end, I think about $15,000 is a sensible number to plan around. It gives the fund's biggest companies credit for growing at a healthy rate, while assuming part of today's premium valuation fades.

That's still a nice result for $10,000. It's just far less than the 18% a year the fund earned in the past 10 years, and I'd plan on the lower figure.

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