The Best ETF to Buy and Hold for the Next Decade, According to 19 Years of History

Seasoned investors who are also students of market history know at least a couple of things about the growth vs. value stocks debate. First, the growth vs. value "winner" used to shift, meaning that leadership between the two styles was once cyclical.

Second, when one of those styles wears the crown, it often does so for an extended period. Of those two points, only the latter has been holding up. Save for a "blip" during the bear market of 2022 when the Russell 1000 Value Index merely delivered a less-bad showing than its growth counterpart, growth stocks have been besting their value rivals since 2008.

That's been to the advantage of the Vanguard Morningstar Mega-Cap Growth ETF (NYSEMKT: MGK), a $34.9 billion exchange-traded fund (ETF) that turns 19 years old in December.

This time is different

There are many investing quotes about history, and there's no denying that this Vanguard ETF has an impressive track record. Over nearly 19 years on the market, this fund trounced the S&P 500 and a major ETF tracking the S&P 500 Growth Index.

Data by YCharts

Speaking of history, growth stocks are believed to be vulnerable to Federal Reserve interest rate tightening, but the central bank's rate-hiking campaign spanning 2022 and 2023 was only a temporary headwind to growth stocks and this Vanguard ETF.

Interest rate history is meaningful when discussing this ETF because the Fed often raises rates to cool the economy and ward off inflation. The latter is a worthy pursuit, but if higher rates create a sluggish economy or a recession, growth stocks become more desirable because economic growth is scarce. Many large- and mega-cap growth companies are delivering stronger earnings growth while maintaining strong balance sheets.

Balance sheets are just one reason the future is bright for this Vanguard ETF, and it's a potential catalyst not to be overlooked. Of the 10 domestic companies with the largest cash stockpiles, six are top-10 holdings in this ETF. Those cash hoards are all the more attractive at a time when just four members of this fund's roster are expected to spend $745 billion this year on artificial intelligence (AI) investments. That is to say, some of this ETF's largest components are spending big today to better position themselves and their investors for tomorrow. That could bode well for the Vanguard ETF's status as a winner over the next decade.

Convenience and a low fee

Experienced investors also know that simply because a stock performed well in the past, it's not guaranteed to continue doing so. Even some of the highest fliers have off years, and that's true of some of the biggest names in this Vanguard ETF.

That said, although this ETF's 52 holdings had a median market capitalization of $1.8 trillion as of Sept. 30, many of the fund's marquee components remain leading innovators. Not only that, but as noted above, they're cash-rich and plenty fit the bill as wide-moat firms. In other words, the fund's status as a convenient one-stop shop for Magnificent Seven exposure could benefit investors over the next decade.

Speaking of benefits, this ETF lives up to its Vanguard heritage, as highlighted by its low annual fee of 0.05%, or just $5 on a $10,000 stake, making it appealing to buy-and-hold market participants.

Todd Shriber has positions in SPDR Series Trust-State Street SPDR Portfolio S&P 500 Growth ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.