2 Vanguard ETFs to Buy to Outperform the S&P 500 Over the Next Decade, According to Analysts

Vanguard's updated Capital Markets Model identifies value and small-cap U.S. equities as undervalued and likely to outperform the S&P 500 over the next decade. The model projects 10-year annualized returns of ~6.9% for value stocks and ~6.8% for small caps versus ~5.9% for the total U.S. market and ~5.8% for large caps. Vanguard recommends tilting toward these segments via two low-cost ETFs — Vanguard Value ETF (VTV) and Vanguard Small-Cap ETF (VB) — each with a 0.03% expense ratio. The recommendation is driven by stretched valuation multiples (S&P 500 Pure Growth vs Pure Value forward P/E above 2) and the expectation of mean reversion, implying potential long-term outperformance for investors who underweight overvalued areas and overweight undervalued segments.