The 10-year average return on VOO, interpreted as the annualized average return (Compound Annual Growth Rate or CAGR), is approximately 13.28%. This figure reflects the compound growth rate of an investment in the Vanguard S&P 500 ETF (VOO) over a decade.
This annualized average return is derived from the total returns achieved by VOO over the specified 10-year period. It provides a clearer understanding of the consistent yearly growth an investment would have experienced.
Detailed Breakdown of VOO's 10-Year Performance
VOO is designed to track the performance of the S&P 500 Index, representing the performance of large-capitalization U.S. stocks. When assessing its long-term performance, it's essential to distinguish between total returns and their annualized average. Total return shows the overall percentage gain, while the annualized average return provides a smoothed, constant annual rate of growth over the period.
Below is a table summarizing the 10-year total returns for VOO (both market price and NAV) and its benchmark, along with their corresponding annualized average returns:
| Metric | 10-Year Total Return | 10-Year Annualized Average Return (CAGR) |
|---|---|---|
| VOO (Market Price) | 248.71% | 13.28% |
| VOO (NAV) | 248.76% | 13.28% |
| Benchmark S&P 500 Index | 250.02% | 13.37% |
Note: The annualized average return (CAGR) is calculated from the total return using the formula: ((1 + Total Return)^(1 / Number of Years)) - 1.
Important Considerations for VOO's Returns
- Market Price vs. NAV: The market price return reflects the actual price at which VOO shares are bought and sold on the stock exchange, influenced by supply and demand. The Net Asset Value (NAV) return represents the per-share value of the underlying assets held by the ETF. While generally very close, minor differences can arise.
- Benchmark Alignment: VOO's performance closely mirrors that of the S&P 500 Index, which is its benchmark. This indicates the ETF's efficiency in passively tracking the performance of the broader U.S. stock market.
- Long-Term Investing: An annualized average return exceeding 13% over a decade underscores the significant benefits of long-term investment in diversified index funds. This consistent growth highlights the compounding effect on investments over time.
For comprehensive information and the latest performance data on VOO, you can visit the official Vanguard VOO profile page.
