Vanguard’s VOO ETF Soars 337% in a Decade—But Can It Last?
The Vanguard S&P 500 ETF (VOO) has delivered strong returns in recent years, reflecting the broader market’s growth. Over the last decade, the fund generated a total return of 337%, with an annualised gain of 15.9%. Yet, concerns about high valuations and future performance have prompted investors to consider alternatives.
VOO tracks the S&P 500, giving investors exposure to 500 of the largest US companies. The tech sector’s expansion and dominance have played a key role in its performance. In the past 12 months alone, the fund returned 17%.
Low interest rates have supported business investment and consumer spending, boosting corporate earnings. Passive investing has also driven more capital into equities, increasing demand for stocks like those in VOO. However, the S&P 500’s current CAPE ratio of 40.8 suggests the stock market today is historically overvalued.
High CAPE ratios often lead to lower long-term returns, typically in the low single digits annually over the following decade. While the S&P 500’s long-term average annualised return is around 10%, forecasts for VOO remain positive. Coinpriceforecast.com predicts the ETF could reach $700–$713 by early 2027, climbing to $738–$749 within the first half of the year.
Investor Howard Marks has warned that credit opportunities may now offer better risk-adjusted returns than stocks. His comments highlight growing caution about the stock market’s stretched valuations.
VOO’s past performance has been strong, but high valuations raise questions about future gains. Forecasts still project growth, though returns may slow if historical trends hold. Investors are now weighing whether alternatives like credit could provide more stable opportunities.
