How has Vanguard Performed in the Past 5 Years? A Step-by-Step Guide to Understanding its Returns
Are you curious about how your Vanguard investments have fared in recent years? Or perhaps you're considering investing with Vanguard and want to understand their track record before you commit your hard-earned money. You've come to the right place! In this comprehensive guide, we'll break down Vanguard's performance over the past five years, from roughly mid-2019 to mid-2024, focusing on some of their most popular funds.
This isn't just about a single number. We'll explore the performance of different types of funds, from broad market index funds to growth-focused ETFs and even bond funds. You'll gain a clearer picture of how Vanguard's passive investment strategy has navigated market volatility, economic shifts, and a global pandemic.
Let's dive in and see what the data reveals!
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| How Has Vanguard Performed In The Past 5 Years |
Step 1: Get to Know the Vanguard Philosophy
Before we look at the numbers, it's crucial to understand what makes Vanguard, well, Vanguard. Their core philosophy is built on a few key pillars:
Low Costs: This is the cornerstone of Vanguard's approach. They believe that high fees are a major drag on investment returns. By keeping expense ratios extremely low, they allow more of your money to stay invested and grow.
Indexing: The vast majority of Vanguard's funds are passive index funds. This means they don't try to "beat the market" by picking individual stocks. Instead, they aim to match the performance of a specific market index, like the S&P 500 or the total U.S. stock market.
Broad Diversification: Vanguard's index funds hold a large number of securities, providing instant diversification across various companies, sectors, and asset classes. This helps reduce risk.
So, when we talk about Vanguard's performance, we're really talking about how the market indexes they track have performed. Their goal is not to outperform the market by a huge margin, but to match it with minimal fees.
Step 2: Analyzing the Flagship Stock ETFs
Let's start with the big players. These are the funds that track the broader U.S. stock market and are staples in many investor portfolios. We will analyze the performance from roughly mid-2019 to mid-2024.
Sub-heading: Vanguard S&P 500 ETF (VOO)
Tip: Take your time with each sentence.
VOO is Vanguard's premier ETF that tracks the performance of the S&P 500 Index. This index represents 500 of the largest U.S. companies and is often considered the benchmark for the U.S. stock market.
The Big Picture: Over the past five years, VOO has delivered strong double-digit annualized returns, closely mirroring the impressive performance of the S&P 500. The period saw a rapid recovery from the 2020 pandemic downturn, followed by a robust bull market, and then some volatility driven by inflation and rising interest rates.
Key Data Points: As of mid-2025, the 5-year annualized return for VOO (based on NAV) is reported to be around 15.72%. This means that a hypothetical investment of $10,000 in VOO five years ago would have grown to over $20,000, not including dividends.
Outperformance vs. Active Management: A key takeaway is that VOO, with its incredibly low expense ratio of just 0.03%, has outperformed a significant number of actively managed funds over this period. While active managers try to pick winners, VOO simply owned the market and benefited from its overall growth.
Sub-heading: Vanguard Total Stock Market ETF (VTI)
VTI is another powerhouse, tracking the performance of the entire U.S. stock market, including large-, mid-, and small-cap stocks. It's a more diversified version of VOO, holding over 3,500 stocks.
The Big Picture: VTI's performance over the past five years has been remarkably similar to VOO. This is because the S&P 500, with its large-cap focus, accounts for a significant portion of the total market's value.
Key Data Points: As of mid-2025, the 5-year annualized return for VTI (based on NAV) is reported to be around 15.24%. This is very close to VOO's return, highlighting that while VTI is more diversified, large-cap stocks have been the primary growth drivers in the U.S. market.
Why Diversification Matters: While the returns may be similar, VTI offers a more comprehensive market exposure. For investors who believe in the growth potential of smaller companies, VTI is a great choice as it captures the entire market, not just the largest companies.
Step 3: Exploring the Growth and Bond Funds
Vanguard offers more than just broad market indexes. Let's look at a couple of other popular funds to understand their performance in different investment categories.
Sub-heading: Vanguard Growth ETF (VUG)
If you're looking for funds focused on companies with strong growth potential, VUG is a prime example. It tracks an index of large-cap growth stocks.
The Big Picture: The past five years have been a golden age for growth stocks, particularly in the technology and consumer discretionary sectors. This has been driven by the dominance of "Mega-Cap" companies like Apple, Microsoft, and Nvidia.
Key Data Points: VUG's 5-year annualized return as of mid-2025 has been exceptionally strong, at over 20%. This has significantly outperformed both the S&P 500 and the total stock market, demonstrating the incredible run that growth-oriented companies have had.
High Reward, High Risk: It's important to note that this high return comes with higher risk. When growth stocks are out of favor, they can experience more significant losses than the broader market. The volatility of this fund is typically higher.
Sub-heading: Vanguard Total Bond Market ETF (BND)
Tip: Read slowly to catch the finer details.
Now, let's switch gears and look at a bond fund. Bond funds are a crucial part of a diversified portfolio, especially for investors seeking stability and income. BND tracks the performance of the U.S. investment-grade bond market.
The Big Picture: The past five years have been a challenging period for bonds due to rising inflation and subsequent interest rate hikes by the Federal Reserve. Bond prices typically fall when interest rates rise.
Key Data Points: Unlike the stock funds, BND has experienced a more modest performance, and in some periods, even negative returns. As of mid-2025, its 5-year annualized return is reported to be in the negative territory or close to zero. This reflects the inverse relationship between interest rates and bond prices.
Understanding the Role of Bonds: This performance doesn't mean BND is a "bad" investment. It simply highlights the different role of bonds in a portfolio. Bonds are for capital preservation and income generation, not aggressive growth. They provide a counterbalance to the volatility of stocks. During the stock market downturn in early 2020, BND provided a valuable buffer for many portfolios.
Step 4: Putting It All in Perspective
So, what does this all mean for you as an investor?
Equity Performance: Vanguard's stock-based funds, particularly those tracking the U.S. market, have shown excellent performance over the past five years. This is a direct reflection of the U.S. market's strength and the growth of key technology companies.
The Power of Low Costs: These strong returns were achieved with some of the lowest expense ratios in the industry, meaning you keep more of your money working for you. This is a powerful advantage over the long term.
Diversification is Key: While growth stocks have been a clear winner, a diversified portfolio with both stocks and bonds has been essential for managing risk. The past five years are a perfect example of how different asset classes perform in different economic environments.
In summary, Vanguard has performed exceptionally well over the past 5 years, delivering on its promise of low-cost, broadly diversified index investing that closely tracks the market's performance.
10 Related FAQs
How to track the performance of my Vanguard funds?
You can easily track the performance of your Vanguard funds by logging into your account on the Vanguard website or using their mobile app. They provide detailed performance data, including annualized returns, growth charts, and comparisons to their benchmarks.
How to understand the difference between VOO and VTI performance?
Tip: Focus more on ideas, less on words.
VOO tracks the S&P 500 (500 large companies), while VTI tracks the entire U.S. stock market (over 3,500 companies). Their performance has been similar because the largest companies in the S&P 500 make up a huge portion of the total market. VTI offers broader exposure, which can be beneficial if smaller companies outperform.
How to interpret a bond fund's negative return?
A negative return in a bond fund, like BND, indicates that the value of the underlying bonds has decreased. This typically happens when interest rates rise, as newer bonds are issued with higher yields, making older, lower-yield bonds less valuable. It doesn't mean the fund is failing; it's a normal part of the bond market cycle.
How to find the expense ratio of a Vanguard ETF?
You can find the expense ratio for any Vanguard ETF on its profile page on the Vanguard website, on financial data websites like Morningstar or Yahoo Finance, or in the fund's prospectus. It will be listed as a percentage, for example, 0.03%.
How to compare Vanguard's performance to the overall market?
Vanguard's ETFs are designed to track specific market indexes. To compare their performance, look at the fund's total return and compare it to the total return of its benchmark index. For example, compare VOO's return to the S&P 500's return.
How to build a diversified portfolio with Vanguard ETFs?
Tip: Don’t skip the details — they matter.
You can build a diversified portfolio by combining different Vanguard ETFs. A common strategy is to use a core holding like VTI (for U.S. stocks) and complement it with BND (for U.S. bonds) and VXUS (for international stocks) to achieve a desired asset allocation.
How to calculate my own investment growth with past returns?
To calculate the growth of an investment, you can use the compound annual growth rate (CAGR) formula: . You can also use online investment calculators and plug in historical return data.
How to access historical performance data for Vanguard funds?
Historical performance data for Vanguard funds is readily available on their official website under the "Performance" or "Price & Performance" tab for each fund. You can view returns for various time periods, including 1-year, 3-year, 5-year, 10-year, and since inception.
How to choose between a Vanguard mutual fund and an ETF?
Both mutual funds and ETFs from Vanguard are excellent low-cost options. ETFs are traded on an exchange like stocks, offering intraday liquidity. Mutual funds are bought and sold at the end-of-day net asset value. ETFs can be more tax-efficient, but mutual funds may be better for setting up automatic investments.
How to understand the impact of dividends on total return?
The "total return" of a fund includes both the appreciation of the share price and any dividends or distributions paid out. It is the most accurate measure of a fund's performance. When you see a return number, check if it's the total return, as this gives you the full picture.
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