2 Vanguard Index Funds to Buy Now -- They Can Beat the S&P 500 Over the Next Decade, According to Wall Street Analysts

J.P. Morgan projects developed ex‑U.S. equities and emerging markets will modestly outperform the S&P 500 over the next 10–15 years (7.5% and 7.8% annual returns vs. 6.7% for the S&P), a view supported by recent relative strength (VEA +31% and VWO +22% YTD) and cited drivers of cheaper valuations, stronger foreign currencies versus the dollar and higher dividends. The piece highlights low‑cost ETFs for gaining that exposure—Vanguard FTSE Developed Markets ETF (VEA) with top holdings including ASML, Samsung, AstraZeneca and a 0.03% expense ratio, and Vanguard FTSE Emerging Markets ETF (VWO) concentrated in TSMC, Tencent and Alibaba with a 0.07% fee. The author nevertheless recommends modest allocations to these international funds while maintaining a larger U.S. weighting, noting forecasting risk (J.P. Morgan’s prior long‑term S&P forecast materially underestimated realized returns), so institutional investors should balance valuation, currency and dividend tailwinds against the historical persistence of U.S. equity outperformance when adjusting global equity allocations.

Analysis

J.P. Morgan's long‑term assumptions forecast the S&P 500 to return 6.7% annually over the next 10–15 years versus 7.5% for developed‑market equities and 7.8% for emerging‑market equities, with the article citing cheaper valuations, stronger foreign currencies versus the U.S. dollar, and higher dividends as the primary drivers. Market performance in 2025 supports recent relative strength: the S&P 500 is up ~16% YTD while Vanguard FTSE Developed Markets ETF (VEA) is +31% and Vanguard FTSE Emerging Markets ETF (VWO) is +22% YTD.

The piece details fund composition and costs that matter for implementation: VEA holds ~3,800 non‑U.S. developed stocks with top weights including ASML (1.4%), Samsung (1.1%) and a 0.03% expense ratio; VWO holds ~6,000 emerging‑market names led by TSMC (10.6%), Tencent (4.5%), Alibaba (3.4%) and a 0.07% fee. Ten‑year total returns show VEA +132% and VWO +119% versus the S&P 500 +297%, underscoring the historical U.S. outperformance the author warns against betting against.

The author recommends modest allocations to these Vanguard ETFs while prioritizing a larger S&P 500 weighting and individual U.S. stocks, and highlights forecast uncertainty by noting J.P. Morgan's 2020 S&P long‑term forecast of 5.7% versus an actual ~15.1% annualized return since then. Investors should therefore weigh valuation and FX tailwinds against forecasting risk, monitor currency moves and dividend behavior, and treat J.P. Morgan's assumptions as one input rather than a guarantee.

Key Decisions for Investors

• Consider a modest tactical allocation to VEA and VWO to capture valuation, FX and dividend tailwinds but keep international exposure smaller than your core S&P 500 sleeve
• Maintain S&P 500 index funds and selective U.S. equities as the primary equity allocation given their decade‑to‑date outperformance referenced in the article
• Monitor USD weakness, realized dividend yields and relative valuations as triggers to increase international exposure if the cited drivers prove persistent
• Use J.P. Morgan's 7.5%/7.8% long‑run assumptions as scenario inputs but reassess strategy if realized returns diverge materially, given the 2020 forecast miss cited in the article