Key Points
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The Vanguard S&P 500 ETF launched on Sept. 7, 2010, and has returned about 14.7% annually since.
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The fund charges 0.03% a year, or about $3 annually on a $10,000 balance.
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Roughly nine in ten large-cap U.S. funds failed to beat the S&P 500 over the 15 years through 2024.
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The Vanguard S&P 500 ETF (NYSEMKT: VOO) has never had an investment idea. It buys the roughly 500 companies in the S&P 500 (SNPINDEX: ^GSPC) index in proportion to their size, and when the index changes, it changes. There is no research team picking winners and no manager to interview.
That approach now holds about $980 billion of other people’s money, which makes it one of the largest funds in the world.
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And here is what it did with the money. Vanguard launched the fund on Sept. 7, 2010. Since then, it has returned about 14.7% a year with dividends reinvested, which turns an initial $10,000 into roughly $88,000 today — close to nine times the original stake in a little under 16 years.
An investor who bought at the launch and never looked at it again has done extraordinarily well by doing nothing.
Image source: Getty Images.
Why the number got that big
Two things produced it, and neither involved skill.
The first is simply what the index did over the period. The fund launched about 18 months after the market bottomed in March 2009, and the stretch since has included the smartphone build-out, the shift to cloud computing, and a decade of low interest rates.
More recently, it has included the pandemic recovery and the artificial intelligence (AI) spending boom. A 14.7% annualized return is well above the index’s long-run average, and investors should not extrapolate it forward.
The second is cost, and this is the part that gets underrated.
The fund’s expense ratio is 0.03%. On a $10,000 balance, that’s about $3 a year. It is close enough to zero that the fund’s return and the index’s return are nearly the same number, year after year, which is the whole design.
Fees look trivial in any single year. Compounded across 16, they aren’t.
Run the arithmetic, and it’s easy to see why. A fund charging half a percentage point more per year, holding exactly the same stocks, would have compounded at about 14.2% instead of 14.7%. On the same $10,000, that lands near $82,000 instead of $88,000. Half a percentage point, quietly, took about $6,000 — and the gap widens every year the money stays invested.
Of course, an investor never sees that cost. It doesn’t appear on a statement or arrive as a bill. It comes out of the return before the return is reported, which is why it can go unnoticed for a decade at a time.
What the same money would have done in an active fund
That leads to the comparison that gives the figure its meaning. What if the $10,000 had gone to a professional stock picker instead?
S&P Dow Jones Indices tracks this, and the record is not close. Over the 15 years ending in December 2024, about 89.5% of actively managed large-cap U.S. equity funds underperformed the S&P 500. Roughly one in ten beat it.
The pattern held recently, too. In 2025, 79% of active large-cap funds trailed the index, a worse showing than 2024’s 65%.
So the best way to describe the choice isn’t index versus active. It’s a near-certain result versus a lottery with poor odds, where the payoff for guessing right is usually a percentage point or two, and the cost of guessing wrong can be severe. Sure, buying the whole market means owning the weak companies alongside the strong ones, and that can feel like a compromise. In practice, however, it has beaten nine out of ten professionals who tried to own only the strong ones.
But it’s worth noting that the fund is not risk-free. For instance, its 10 largest holdings made up about 36% of assets as of June 30, led by Nvidia at 7.5% and Apple at 6.6%. That leaves a lot of the fund riding on a handful of technology companies, and a downturn in them would pull it down harder than a 500-stock headcount suggests.
And the fund yields only about 1.1%, so it isn’t much of a dividend stock. Additionally, a 14.7% annual return through a mostly rising market doesn’t mean the same will be true for the next 16 years.
But these risks and asterisks shouldn’t necessarily scare investors away. They’re rather a case for owning it with realistic expectations, not a case against owning it. I’d still buy this fund, though I’d buy it automatically, on a schedule, and without checking it.
Because the $88,000 wasn’t produced by an insight. It came from 16 years, three basis points in fees, and the discipline to leave the account alone. None of those require being right about anything, which is precisely why so few investors manage it.
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Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
