The Vanguard S&P 500 ETF Is Magnificent. These Investments Could Be Even Better.
Key Points
If you're seeking dividend income, there's a better alternative.
If you're seeking faster potential growth, there are multiple ETFs to consider.
If you'd like more international exposure, here's a fund to check out.
The Motley Fool has numerous articles recommending simple, low-fee S&P 500 index funds as great investments for most people. And they are great investments. They're not perfect, though, and there are some other solid funds you might want to consider instead. Here's a look at a few.
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Why not just stick with an S&P 500 index fund?
You can do quite well with just, say, the Vanguard S&P 500 ETF (NYSEMKT: VOO). It's rather concentrated, though, with a recent 39% of its assets invested in just its top 10 holdings. Its top four holdings alone (as of May 31) -- Nvidia, Apple, Microsoft, and Amazon -- made up 24% of the fund's value. That's not a problem if you want much of your money in giant tech stocks.
However, if you were also interested in the other 490-plus companies, they won't be moving the needle much. Here are recent returns for the Vanguard S&P 500 ETF and four alternative investments to consider. I'll review each next.
Fund |
3-Year Avg. Annual Return |
5-Year Avg. Annual Return |
10-Year Avg. Annual Return |
|---|---|---|---|
Vanguard S&P 500 ETF |
21.26% |
13.11% |
15.36% |
Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP) |
14.71% |
8.82% |
11.99% |
Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) |
14.60% |
8.77% |
12.42% |
Vanguard Information Technology Index Fund ETF (NYSEMKT: VGT) |
30.05% |
19.05% |
25.15% |
iShares Core MSCI Total International Stock ETF (NASDAQ: IXUS) |
19.13% |
8.62% |
9.95% |
Data source: Morningstar.com, as of July 9, 2026.
A better investment if you're seeking equal representation
The Invesco S&P 500 Equal Weight ETF is also an S&P 500 index fund, but instead of weighting the components by market value, with the biggest companies wielding the most influence, it weights each company equally every quarter. If you want more exposure to all of the companies, not just mainly the biggest ones, consider this fund.
A better investment if you're seeking passive income -- from dividends
Whereas the S&P 500 recently featured a dividend yield of just 1.1%, the Schwab U.S. Dividend Equity ETF recently yielded 3.3% -- three times more! It's also been a solid grower, as you can see in the table above. If you'd like both dividend income and share-price appreciation, take a closer look at this solid ETF.
A better investment if you're seeking faster growth
If the S&P 500 isn't delivering enough growth for you, there are plenty of growth-oriented ETFs to consider, such as the Vanguard Information Technology Index Fund ETF. Most of them have roughly the same top 10 holdings as the S&P 500, but weight them even more heavily. Understand, too, that many growth stocks can get overvalued, and should the market correct or crash, they tend to fall especially hard.
A better investment if you're seeking more diversification
If you're worried about a U.S. stock market crash, consider holding a chunk of your assets in foreign-based companies, via an ETF such as the iShares Core MSCI Total International Stock ETF. It's invested in thousands of small, mid-sized, and large foreign companies, and offers a dividend payout recently yielding 2.9%.
Selena Maranjian has positions in Amazon, Apple, Microsoft, Nvidia, and Schwab U.S. Dividend Equity ETF. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.