The Best Vanguard ETF to Invest $1,000 in Right Now

Key Points

• The Vanguard Growth ETF gives investors exposure to top tech and other growth stocks.

• The ETF has been a strong performer over the past five and 10 years.

• Still, $1,000 is just a start, and investors should look to dollar-cost average into the ETF.

• 10 stocks we like better than Vanguard Index Funds - Vanguard Growth ETF ›

If you're a new investor looking to put $1,000 to work in the market right now, one of the best places to start is with an exchange-traded fund (ETF). The reason is because ETFs give you instant diversification without the need to research and pick individual stocks.

For my money, the Vanguard Growth ETF (NYSEMKT: VUG) is one of the best options to consider. Let's look at why this ETF could be good choice over the long run.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Why the Vanguard Growth ETF is a great investment option

The Vanguard Growth ETF mimics the CRSP US Large Cap Growth Index, which is essentially the growth half of the S&P 500. That means it tilts heavily toward technology and other high-growth names. More than 60% of its portfolio is made up of tech stocks, and another chunk sits in consumer discretionary, which often includes companies that are just as tech-focused. Amazon, for example, is the largest cloud computing provider in the world and designs its own chips, yet it is technically classified as consumer discretionary. The same goes for Tesla, which is pushing forward in autonomous driving and robotics.

The ETF's concentration in top-tier growth stocks is what sets it apart. The "Magnificent Seven" -- which consists of Apple, Microsoft, Nvidia, Amazon, Tesla, Meta Platforms, and Alphabet -- play a big role in the portfolio, making up more than half its holdings. These companies are not just market leaders; they are also at the center of the artificial intelligence (AI) boom. With AI looking like a game-changing technology, these are the stocks you want to own for the next decade.

Given that the ETF owns all the leading AI names, it is one of the most efficient ways to invest in AI, as you don't need to guess which stocks will win the most. The Vanguard Growth ETF gives you exposure to all of the top names, and as a market cap-weighted index fund, it will let the winners ride and the losers fade into the background.

A history of outperformance

The Vanguard Growth ETF's performance, meanwhile, speaks for itself. Over the past decade, the ETF has delivered an annualized average return of more than 17%, easily beating the S&P 500's 14.6% return. Its more-recent returns have been even better. The ETF has produced a 25% average annual return over the past five years, while it's gained 23% over the past year. A $1,000 investment in the Vanguard Growth ETF 10 years ago would now be worth about $4,850, compared to $3,900 in the S&P 500.

The downside to owning the Vanguard Growth ETF is that it is less diversified than the S&P 500, and thus can carry more risk. If the market shifts toward value-oriented stocks, it will likely underperform. However, with AI still looking like it is in its early days, the ETF looks well-positioned over the long term.

Dollar-cost averaging remains key

Now with the market at all time highs, the temptation could be to wait for a pullback, but that's generally not a good idea. The problem is that pullbacks are unpredictable, and sometimes they never come. JPMorgan research found that since 1950, the S&P 500 has hit new highs on 7% of all trading days. Meanwhile, on a third of those occasions, it never traded lower again, meaning waiting for a pullback would have cost you money.

The better strategy is dollar-cost averaging, which is simply committing to invest a set amount of money on a regular basis no matter where the market is. This method takes emotions and guesswork out of the equation. It also means you buy more shares when prices go down, which can boost your overall return. By steadily buying into an ETF like the Vanguard Growth ETF every month, or with every paycheck, you take advantage of compounding and build wealth over time.

Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now?

Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $670,781!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,023,752!*

Now, it’s worth noting Stock Advisor’s total average return is 1,052% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. 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.