Bold headline: Even in a market downturn, these Vanguard ETFs could still power your growth. But here's where it gets controversial: sticking with growth can be risky if a sell-off accelerates. This piece explains why a growth-first approach might still fit a long-term plan, and how diversification could help you ride out volatility in 2026 and beyond.
The S&P 500 has surged about 78% since the start of 2023, far exceeding its long-run average annual return of roughly 9%–10%. Some investors worry a pullback in 2026 and consider unloading growth stocks in favor of value stocks. Yet making drastic portfolio changes based on a hunch often means missing out on extended gains, and timing the market usually requires two correct moves—when to sell and when to buy back in—leaving potential profits on the table.
A more balanced tactic is to align your holdings with your risk tolerance and financial goals instead of reacting to every market blip. Growth-oriented exchange-traded funds (ETFs) that hold many different companies offer exposure to growth while providing diversification, so a sell-off wouldn’t hinge on a few single stocks dragging your portfolio down.
Among the funds discussed, three Vanguard ETFs—VOOG (Vanguard S&P 500 Growth ETF), VGT (Vanguard Information Technology ETF), and VIG (Vanguard Dividend Appreciation ETF)—are highlighted as viable additions even if the market experiences a downturn next year.
- Vanguard S&P 500 Growth ETF (VOOG) A straightforward way to potentially outperform the broader market is to lean into growth stocks, and VOOG aims to do just that by tracking growth-oriented constituents of the S&P 500.
A sizable portion of the fund’s weight is concentrated in a handful of leaders—Nvidia, Microsoft, Apple, Alphabet, Broadcom, Amazon, Meta Platforms, Tesla, Eli Lilly, Visa, JPMorgan Chase, Netflix, Palantir Technologies, Mastercard, and Oracle.
If a 2026 sell-off is driven by valuation concerns or a slowdown in AI spending, growth leaders could lead the pullback, making VOOG appear vulnerable. Yet this exposure can be advantageous for investors aiming to build a long-term growth engine over a three- to five-year horizon.
If your objective is to complement a value-heavy lineup with lasting growth potential, VOOG could be a strong fit. It’s not the best choice for someone seeking immediate stability in a downturn, but it can play a pivotal role in a diversified growth strategy.
- Vanguard Information Technology ETF (VGT) VGT stands out as the only Vanguard sector fund to beat the broad market over the past decade. The tech sector now makes up about a third of the S&P 500 and has been a primary driver of index gains. Those who believe the tech upcycle will continue may want to consider VGT even amid a potential market pullback.
The fund’s holdings are concentrated in a few dominant names—Nvidia, Apple, Microsoft, Broadcom, Palantir, Oracle, and AMD. This concentration has paid off historically, but it also means valuations are stretched, with a price-to-earnings ratio higher than the broader market.
- Vanguard Dividend Appreciation ETF (VIG) VIG emphasizes companies with a track record of increasing dividends, but its yield remains modest—about 1.6%, compared with the S&P 500’s roughly 1.1% yield. The strategy isn’t about chasing high income; it’s about selecting businesses with solid earnings growth potential and a history of returning capital through dividends and share repurchases.
Top holdings include Broadcom, Microsoft, and Apple, none of which yield large dividend percentages, yet all demonstrate strong growth trajectories and capital-return practices. Eli Lilly rounds out the top holdings as a leading pharma company with a robust development pipeline.
Why these funds can help during volatility
Holding growth-oriented ETFs can be psychologically stabilizing during a sell-off. Rather than attributing losses to a single company, you own a basket of growth leaders, which can help you stay the course and benefit from compounding over time.
However, meaningful conviction in the underlying holdings is essential. If you’re relying on a few mega-cap tech names (as these funds do), you should be comfortable with their risks and the potential for volatility to impact performance.
Long-term perspective matters
Even when growth ETFs underperform during a broad downturn, they can still outperform the market over the long haul if you maintain discipline and avoid reactive trading. The key is to integrate these funds into a portfolio that matches your risk tolerance and time horizon, rather than chasing short-term swings.
Disclosure reminder
As with any investment analysis, it’s important to consider individual circumstances and do your own due diligence. The discussed funds hold prominent tech positions and have varied exposure to growth, momentum, and dividends, so their suitability depends on your goals and risk profile.
Would you like a side-by-side comparison of these funds’s expense ratios, historical performance, and risk metrics to help decide which fits your personal plan, or would you prefer a version tailored to a more conservative or more aggressive investor stance?
