Vanguard Growth Index Fund Admiral Shares VIGAX

Vanguard Growth Index effectively represents the contours of the large-cap growth market, while its low price tag helps remedy the shortcomings of its relatively concentrated portfolio.

The fund tracks the CRSP US Large Cap Growth Index, a market-cap-weighted bogy that captures the growth-oriented side of the large-cap market. Market-cap-weighting is a cost-efficient way to size holdings because it harnesses the market's consensus opinion of each stock's relative value. Stocks that grow in size take up a larger share of the portfolio while shrinking companies that may be struggling will have less importance. Generous buffers around the fund's size and style borders improve the breadth of the portfolio and help tame turnover, leading to reduced trading costs.

Investors' lofty expectations can lead to high valuations for growth stocks, which may not be justified. Few companies currently match the positive sentiment embedded in the stock prices of technology giants Microsoft, Nvidia, and Apple. These three stocks represent 34% of the portfolio together, while the fund's top 10 holdings, which include other behemoths like Amazon.com and Meta, account for 64% of assets. That’s 12 percentage points more than the large-growth category norm, as of February 2026.

The market's largest stocks heavily influence this fund's return and risk. That can be a boon or a burden. With so much riding on the largest stocks in the market, the fund should do well when those stocks outperform and suffer when they fall. For example, the exchange-traded fund share class gained over 25% annualized since the beginning of 2023, nearly 6 percentage points better than its average peer. But weak performance from the heaviest hitters spelled a 33% drawdown in the bear market of 2022, 3 percentage points more than its average peer.

Long term, investors should expect periods of outperformance when the largest stocks lead the charge. But those stocks can leave the portfolio vulnerable from time to time, potentially resulting in greater losses than better-diversified peers during broad declines.

Morningstar acquired the Center for Research in Security Prices, the provider of the index tracked by this fund, in February 2026. Morningstar analysts work independently from the index business, and the Morningstar Medalist Ratings for funds tracking CRSP indexes are based solely on the fund's investment merits. Analysts do not provide qualitative ratings or opinions for investments managed by Morningstar or managed investments that track Morningstar indexes that incorporate discretionary inputs assigned by Morningstar employees on an ongoing basis, such as Morningstar Economic Moat Ratings or ESG Risk Ratings.

This strategy efficiently represents the large-growth Morningstar Category, earning it an Above Average Process Pillar rating.

The CRSP US Large Cap Index includes the largest 85% of US stocks by total market cap. CRSP buckets eligible constituents into a growth or value index based on their composite style scores. Each index weights constituents by their float-adjusted market cap. The growth index collects the growth-oriented stocks in this pool. Stocks that land near the value/growth border may have their market cap split across value and growth indexes but such instances are rare: The large-cap growth and value indexes share about 2% of their holdings.

Generous buffer rules and trading windows help tame turnover and the associated trading costs. For a holding to move into an adjacent index, its style traits or market cap must change considerably. Should that occur, the fund initially trades 50% of the stock's market cap to protect against one-off fluctuations. This has put a lid on turnover, which has averaged less than 10% annually since 2014. CRSP spreads trades over five days to mitigate market-impact costs at each quarterly rebalance. These unique steps should reduce unnecessary trading costs and marginally improve returns over time.

The portfolio effectively represents most of the large-cap growth opportunity set. Its sector allocations usually follow the category average, but its sector biases are more pronounced and steered by the market’s largest stocks. The average peer holds a 43% stake in technology companies, while they make up over half this portfolio. Much of this difference comes at the expense of the fund’s healthcare, financials, and industrials allocation. Together, they measure 9 percentage points less than the category average.

Sector biases like these are amplified by a relatively narrow roster of 151 holdings, a figure that has shrunk in recent years. Like rising concentration, a narrower portfolio is not exclusive to this fund. The US stock market is increasingly bifurcated between large and small, growth and value. A handful of large-growth names command considerable attention, but many smaller or cheaper names fall by the wayside. This centers the large-cap growth index on the market's largest growth stocks and relegates those near the middle to the adjacent value index.

Emphasizing the largest growth names in the US market gives the fund a slight quality tilt. Stocks like Nvidia, Microsoft, and Apple are a key reason—they boast meaningful competitive advantages and are highly profitable. The fund’s profitability metrics typically measure better than the average category peer. About 80% of its holdings boast a wide Morningstar Economic Moat Rating, 9 percentage points more than the large-growth category average. Research suggests that high-quality stocks tend to outperform. This may give the fund a long-term leg up and offset the additional concentration risk.

Vanguard's equity index group earns an Above Average People Pillar rating for its well-supported and stable management team adept at leveraging Vanguard's comprehensive resources. Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk-management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure that the management team's interests are closely tied to those of investors.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

This fund's performance has stacked up well against the category average since it adopted its current index in April 2013. From that point through February 2026, the fund's ETF share class beat the category average by 2.1 percentage points annualized. Concentration at the top of the portfolio contributed to greater volatility over this time but not enough to cut into its risk-adjusted advantage.

The fund's market-cap weighting and size and style constraints lead to some sector biases and contrasting stock selection relative to its average category peer. These differences can contribute to performance discrepancies. Greater emphasis on the largest stocks like Apple and Nvidia helped recent performance. In aggregate, focusing on the largest growth stocks proved beneficial, but it should not be counted on as a reliable source of outperformance.

Despite some differences, the fund remains an excellent representative of the large-growth category and should perform well when growth stocks are in favor. Diversifying across the market's largest and strongest helps control risk. Additionally, its low fee presents a durable advantage going forward.

Vanguard Growth Index Admiral's Prospectus Adjusted Expense Ratio is 0.05% per year. It places it in the cheapest quintile of the Morningstar US Fund Large Growth Category, where the median fee is 0.82% per year. This cost positioning translates into a Medalist Rating Price Score of 2.44, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.