It could, but no available evidence establishes that it will. The prediction concerns the iShares Russell 2000 Growth ETF (IWO), a small-cap growth fund—not a broad-market S&P 500 fund. Its case rests partly on the possibility that smaller companies regain leadership and on long-term forecasts for small-cap stocks. Those forecasts are hypothetical, cover a different period, and do not predict IWO’s specific returns.
What does the prediction actually claim?
An October 5, 2026, Motley Fool article argues that IWO could outperform the S&P 500 over the next 20 years. The word “will” in its headline is a prediction, not a demonstrated result. No cited source establishes that IWO will beat the S&P 500 over that particular period.
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The investment thesis has two parts: small-cap stocks might lead the market again, and a forecast cited by the article gives small-cap stocks a higher expected return range than large-cap stocks over 30 years. Neither point is a 20-year forecast for IWO itself.
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What is IWO, and how does it differ from the S&P 500?
IWO is a growth-oriented small-cap ETF associated with the Russell 2000. The S&P 500, by contrast, represents large U.S. companies. Comparing them is therefore not simply a choice between two funds holding the same market in different wrappers: they offer different company-size and investment-style exposures.
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The Motley Fool article reported 1,127 IWO holdings and these sector weights: healthcare 29.2%, information technology 20%, industrials 15.8%, and financials 9.7%. It also reported a 0.24% expense ratio. These are figures reported in that October 5 article, not independently confirmed issuer data here; fund holdings, weights, and fees can change.
| Comparison point | IWO | S&P 500 |
|---|---|---|
| Market-cap exposure | Small-cap, as described by The Motley Fool, October 5, 2026 | Large-cap, as described in Vanguard’s forecast discussion, July 22, 2026 |
| Style | Growth-oriented, as described by The Motley Fool, October 5, 2026 | Broad large-cap market; no growth-only classification is established by the cited sources |
| Reported holdings | 1,127, reported by The Motley Fool, October 5, 2026 | Not stated in the cited sources |
| Reported expense ratio | 0.24%, reported by The Motley Fool, October 5, 2026 | Not stated in the cited sources |
| Matched-period return comparison | Not established in the cited sources | Not established in the cited sources |
The table is not a complete fund comparison: the cited material does not provide matched-date S&P 500 holdings, fees, or performance alongside IWO’s. It does show why a comparison based only on the words “growth ETF” can obscure the central difference in market-cap exposure.
What do the return figures say—and what don’t they say?
Historical performance is not a matched comparison
The Motley Fool article reports that IWO returned approximately 10.6% annualized over the preceding 10 years. It also refers to roughly 15% annualized S&P 500 performance over the past 16 years. Those periods do not match, so the figures cannot establish which investment performed better over the same dates. Past performance also cannot settle which will lead over a future 20-year period.
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The article attributes these 30-year expected annualized return ranges to Vanguard in 2026:
| Asset class | Expected annualized return range | Attribution and horizon |
|---|---|---|
| Small-cap stocks | 5.1%–7.1% | Vanguard, 2026, as reported by The Motley Fool on October 5, 2026; 30-year forecast |
| Large-cap stocks | 4.6%–6.6% | Vanguard, 2026, as reported by The Motley Fool on October 5, 2026; 30-year forecast |
The ranges overlap, and the figures are not forecasts for IWO versus the S&P 500 over 20 years. The exact 30-year figures were not independently recoverable from the accessible text of Vanguard’s interactive table, so they should be understood as the Motley Fool article’s report of Vanguard’s forecast—not as independently verified ETF projections.
Vanguard’s July 22, 2026, Capital Markets Model page says its forecasts come from a June 30, 2026 model run and cover 10- and 30-year horizons. They are nominal estimates—excluding inflation, taxes, and investment expenses—not actual investment results or guarantees. Vanguard says it updates forecasts at least quarterly and that results can vary between model runs. Its current 10-year expected annualized return range for U.S. equities is 4.2%–6.2%, with similar declines across large- and small-cap stocks; that estimate does not establish a small-cap advantage.
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What would make IWO outperform—and what could work against it?
The possible advantage
If small-cap stocks outperform large-cap stocks over an investor’s holding period, IWO’s small-company exposure could benefit relative to a large-cap benchmark. Its growth orientation gives it a more specific style exposure than a broad large-cap fund. The article’s reported small-cap forecast range is consistent with the possibility of stronger long-run small-cap returns, but it is not proof that this possibility will materialize.
The uncertainty
A broad asset-class forecast does not specify how a particular ETF will perform. IWO’s reported sector weights and growth focus are part of its exposure, while the S&P 500 comparison involves a different market segment. The cited material does not quantify how those differences would affect relative returns over the next 20 years, or establish the funds’ future performance.
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Vanguard cautions: “It is important to recognize that valuations tend to be poor predictors of performance over the short or even intermediate term and should not serve as a primary reason for changing portfolio allocations.” Its forecast should be treated as one uncertain input, not a stand-alone reason to change an allocation.
How should an investor evaluate the claim?
- Compare the same dates. Use IWO and S&P 500 performance over identical start and end dates, and make sure the return figures use the same basis. A 10-year result for one and a 16-year result for the other is not a like-for-like comparison.
- Separate forecast from realized return. Historical fund performance describes a past period. Vanguard’s model estimates describe hypothetical asset-class outcomes over specified horizons; neither is a promise about future returns.
- Check the fund’s current details. Before relying on the article-reported holdings, sector weights, or expense ratio, verify them against the issuer’s latest information. The figures cited above are dated October 5, 2026.
- Decide whether the exposure fits. Consider whether small-cap growth exposure is an intended part of a portfolio, rather than assuming that a forecasted asset-class advantage means IWO is a guaranteed substitute for a broad large-cap fund.
So, will IWO crush the S&P 500?
That is unknowable from the evidence cited. The case for IWO is a plausible small-cap leadership thesis supported by a reported long-horizon forecast, but the forecast is hypothetical, concerns broad asset classes, and spans 30 years rather than the headline’s 20. The evidence does not establish that IWO will outperform the S&P 500.
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