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In the realm of finance, if I were to spotlight a Vanguard ETF with the potential to outperform the S&P 500 by 2025, it would be the Vanguard Financials ETF (NYSEMKT: VFH). This ETF zeroes in on companies within the financial services sector, currently holding 409 financial stocks. Among its key holdings are JPMorgan Chase, Berkshire Hathaway, Mastercard, Visa, and Bank of America, with these mega-cap stocks representing 30.7% of its overall portfolio due to market cap weighting. While the fund’s average annual return since its inception in January 2004 stands at 6.7%, it has recently surged, surpassing the S&P 500.*SPX Chart*SPX data by YCharts
A noticeable lead by the Vanguard Financials ETF over the S&P 500 emerged in November 2024, coinciding with the U.S. elections. The potential policies of a second Trump administration, particularly those aimed at alleviating regulatory constraints, could greatly benefit financial stocks.
Sustaining the positive trajectory, the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) emerged as the top-performing Vanguard ETF in 2024, boasting over a 31% increase in the past year compared to the S&P 500.*SPX Chart*SPX data by YCharts
The Vanguard S&P 500 Growth ETF focuses on growth, tracking the S&P 500 Growth Index and holding 209 stocks with a median market cap of $1.1 trillion. Notable holdings include Nvidia, Apple, Microsoft, Meta Platforms, and Amazon, with all but Microsoft outperforming the S&P 500 in the last 12 months. The increasing demand for artificial intelligence (AI) provides significant support to several top growth stocks in the S&P 500, suggesting the Vanguard S&P 500 Growth ETF’s potential to maintain its momentum.
While the Vanguard Financials ETF and the Vanguard S&P 500 Growth ETF are poised to outperform the S&P 500, other Vanguard ETFs may exceed expectations. For instance, the Vanguard Growth ETF (NYSEMKT: VUG) exhibited strong performance in 2024 and could seize the spotlight in the near future. Additionally, a shift favoring small-cap stocks over large-cap stocks could pave the way for ETFs such as the Vanguard Small Cap ETF (NYSEMKT: VB) and Vanguard Small Cap Value ETF (NYSEMKT: VBR) to deliver impressive returns.
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