--- title: "2 Vanguard Index Funds to Beat the S&P 500 Over the Next 10 Years, According to Analysts" type: "News" locale: "en" url: "https://longbridge.com/en/news/279416683.md" description: "Analysts at Vanguard predict that small-cap and value stocks will outperform the S&P 500 over the next decade, with expected annualized returns of 6.2% and 6.8%, respectively. This contrasts with expected returns of 4.9% for U.S. equities overall. Vanguard recommends two ETFs for investors: the Vanguard Small-Cap ETF (VB) and the Vanguard Value ETF (VTV), both with low expense ratios of 0.03%. Both funds have performed well in 2026, with the value fund up 4% and the small-cap fund up 3%, while the S&P 500 has declined by 1% year to date." datetime: "2026-03-16T13:05:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279416683.md) - [en](https://longbridge.com/en/news/279416683.md) - [zh-HK](https://longbridge.com/zh-HK/news/279416683.md) --- # 2 Vanguard Index Funds to Beat the S&P 500 Over the Next 10 Years, According to Analysts The **S&P 500** (SNPINDEX: ^GSPC) has been dominated by a handful of megacap growth stocks over the last few years. Their strong performance of these select stocks has led to the benchmark index posting total returns of 26%, 25%, and 18% in 2023, 2024, and 2025, respectively. Those returns are well above average, and it's reasonable to expect a reversion to the mean going forward. But while the growth stock-led S&P 500 has hit new all-time highs, many other stocks have been left in the dust. Analysts at Vanguard expect a couple of key groups of stocks to outperform over the next decade as a result. And the good news for investors is that it offers simple, inexpensive ETFs you can buy to invest in market segments poised to outperform the large-cap index. _**Will AI create the world's first trillionaire?** Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. **Continue »**_ Image source: Getty Images. ## The two market segments set to beat the S&P 500 over the next 10 years Vanguard analysts provide quarterly updates for investors on its Capital Markets Model forecasts. The model uses valuations to project long-term prospects for equities, bonds, and other asset classes as well as inflation. Vanguard notes that valuations tend to be poor predictors of short-term returns but can be useful for longer-term predictions. As such, it doesn't recommend using these predictions as the primary reason for changing portfolio allocations. That said, long-term outlooks can offer ideas for investors thinking about the markets going forward. The most recent update from Vanguard's model shows two segments of the market outperforming over the long run: small-cap stocks and value stocks. The analysts see small-cap stocks producing annualized returns of 6.2% and value stocks producing 6.8% average returns. That compares to expected returns of 4.9% for U.S. equities overall and 4.8% for large-cap stocks in particular. With valuations as the core basis for Vanguard's model, it's easy to see why it expects small-cap and value stocks to outperform. At the start of 2026, the valuation spread between growth stocks and value stocks is at its widest since the peak of the dot-com bubble. The trailing P/E for the **Russell 1000 Growth** index was 39.32 compared to just 22.12 for the **Russell 1000 Value** index. Likewise, the valuation gap between the large-cap S&P 500 and the small-cap S&P 600 is also notable. The S&P 500 traded for a forward P/E of 24 at the end of 2025 compared to a 16-times earnings ratio for the S&P 600. That's despite similar earnings growth outlooks. Overall, the long-term prospects for both value and small-cap stocks look promising based on valuation. Here are the two Vanguard funds you can use to take advantage. ## Two Vanguard ETFs to buy For investors looking to tilt their portfolios toward small-cap and value stocks, Vanguard offers two simple and inexpensive ETFs to do just that. The **Vanguard Small-Cap ETF** (NYSEMKT: VB) tracks the performance of the **CRSP U.S. Small Cap Index**. It's highly diversified with over 1,300 stocks in the portfolio. Since it uses standard market-cap weighting, it lets stocks that appreciate in value take up a larger portion of the portfolio. It also reduces turnover, which can be a challenge for many small-cap index funds. With an expense ratio of just 0.03%, it's one of the best-in-class options for small-cap index funds. The **Vanguard Value ETF** (NYSEMKT: VTV) tracks the performance of the **CRSP U.S. Large Cap Value Index**, which includes the less expensive half of the broader market. It includes over 300 stocks, but it maintains a high level of diversification, as the largest holding accounts for just over 3% of the entire portfolio. While the fund's filter is based on simple valuation metrics, leaving it susceptible to value traps, market-cap weighting can mitigate that risk. It also keeps turnover low and costs down. The value ETF is inexpensive, sporting an expense ratio of just 0.03%. Both ETFs have gotten off to a strong start in 2026. The value fund is up 4%, and the small-cap fund is up 3% compared to a decline of 1% in the S&P 500 year to date, as of this writing. But there's still a lot of room for both to keep outperforming over the next decade. Either could be a great addition to a portfolio right now, adding some diversification. ## Should you buy stock in Vanguard Value ETF right now? Before you buy stock in Vanguard Value 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 Value ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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The Motley Fool has a disclosure policy._ 2 Vanguard Index Funds to Beat the S&P 500 Over the Next 10 Years, According to Analysts was originally published by The Motley Fool ### Related Stocks - [VTV.US](https://longbridge.com/en/quote/VTV.US.md) - [VBR.US](https://longbridge.com/en/quote/VBR.US.md) - [VB.US](https://longbridge.com/en/quote/VB.US.md) ## Related News & Research - [3 Low-Cost Vanguard ETFs with 14%+ Upside Potential](https://longbridge.com/en/news/286445933.md) - [VTI vs. VOO — Which Vanguard ETF Should You Own in 2026?](https://longbridge.com/en/news/287079454.md) - [$1000 Invested In Vanguard S&P 500 Growth ETF 15 Years Ago Would Be Worth This Much Today](https://longbridge.com/en/news/286797286.md) - [Analysts Anticipate 10% Upside For BTR](https://longbridge.com/en/news/287054022.md) - [Here's How Much $1000 Invested In Invesco S&P 500 Momentum ETF 5 Years Ago Would Be Worth Today](https://longbridge.com/en/news/286828542.md)