Could This Overlooked Vanguard ETF Make You a Millionaire? Here’s What History Says
What if one of Vanguard’s most overlooked ETFs could turn $1,000 a month into $1 million?
The Vanguard Extended Market ETF (NYSEMKT: VXF) has historically generated returns capable of doing exactly that. And there’s good reason to think its investment case could become more compelling over the coming decade.
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Here’s what investors should know.
This Vanguard ETF goes where the S&P 500 doesn’t
The Vanguard Extended Market ETF tracks the S&P Completion Index, which essentially owns the total U.S. stock market minus the S&P 500. This gives investors exposure to thousands of mid- and small-cap companies, rather than familiar (and probably over-owned) mega-cap stocks, such as Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL).
The fund charges just 0.05% annually and has returned an average of 9.9% annually since its December 2001 inception.
Imagine that an investor contributed $1,000 every month and earned that same 9.9% annualized return. They would have reached the $1 million mark in roughly 23 years.
Of course, past returns don’t suggest what the fund will do in the future. But this example demonstrates what a combination of time, regular contributions, and the long-term power of compounding can accomplish.
Smaller companies offer big opportunities
The Vanguard Extended Market ETF’s long-term investment case becomes more interesting when you consider which stocks have led the market lately.
Large-cap stocks, particularly mega-cap tech companies, have dominated most of the past decade. As a result, this fund experienced some difficult stretches. Its performance includes a 35% total drawdown during the 2022 bear market and annualized returns of only around 6% over the past five years.
But market leadership doesn’t remain that concentrated or unchanged forever.
VXF has already begun showing signs of life in 2026. The fund is outperforming the S&P 500 by nearly 1% this year, has returned 14% over the past 12 months, and has delivered a three-year annualized return of around 18%.
With earnings growth for smaller companies expected to accelerate over the next several quarters, thanks to the artificial intelligence (AI) boom, opportunities outside the S&P 500 look pretty attractive.
More importantly, the Vanguard Extended Market ETF holds companies that may be earlier in their growth journeys. Today’s mid-cap stocks often graduate into the S&P 500, and this fund allows investors to own those names before that happens.
