1 Unstoppable ETF I'm Buying and Holding for Decades -- Even if the Stock Market Crashes

The past four years have been one of the best stretches ever for the Vanguard Morningstar Growth ETF (NYSEMKT: VUG). Since the beginning of 2023, the fund has returned just over 150%. Its heavy overweighting in technology stocks, currently 72% of the portfolio, and the tailwind from the artificial intelligence (AI) boom have combined to make a lot of money for shareholders.

The flip side is that if the stock market ever crashes, those factors that made it an outperformer could easily turn it into a deep underperformer.

But that's the price of admission for investing in growth stocks. And it's a big part of the reason why I'd buy and hold this fund for decades, even through a market crash. The potential for above-average long-term returns, despite the volatility, is worth owning.

Image source: Getty Images.

VUG targets an evolving growth-oriented economy

The Vanguard Morningstar Growth ETF tracks an index that targets stocks according to several fundamental factors. Among them are historical and forecast earnings growth, historical revenue growth, return on assets (ROA), and investment relative to debt. It's a strategy that invests in stocks that have performed well in the past and are expected to continue to do so.

One of the fund's biggest advantages is its ability to evolve. If another sector or theme begins to grow rapidly, the selection criteria will begin to capture those stocks and increase their allocation in the index. It's a long-term strategy that will adjust as the economy adjusts.

A crash will hurt, but here's what you shouldn't do

Since its 2004 inception, the Vanguard Morningstar Growth ETF has experienced three major bear markets. It lost more than 50% during the financial crisis, nearly 30% during the COVID-19 pandemic, and more than 30% during the 2022 bear market. It's also returned more than 12% annually over those 22 years, even with bear-market drawdowns.

It's a good example of why short-term volatility shouldn't derail a long-term strategy. With growth stocks especially, the lows can be lower. But this fund has also delivered above-average returns for more than two decades.

Selling or trying to time the market during market crashes is only likely to damage your returns. If you have a long-term time horizon, riding out volatility, corrections, and bear markets is usually the best path.

Own the Vanguard Morningstar Growth ETF through the next crash

Crashes can be some of the best buying opportunities. Historically, the market has recovered from every bear market, even the ones that felt catastrophic at the time. You can buy shares at discounted prices and actually improve your long-term returns. Continuing your automatic investment plans is the easiest way to take advantage of this.

Even with the potential for crashes along the way, the long-term potential of the Vanguard Growth ETF outweighs the short-term risk.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Morningstar Growth ETF. The Motley Fool has a disclosure policy.