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Choosing a top-performing Vanguard ETF for the upcoming year is no simple task. While there are several contenders within the Vanguard family, it’s essential to consider their potential for success.
One strong contender is the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG), which emerged as the top-performing ETF within Vanguard in 2024. With the fund’s largest holdings including the renowned “Magnificent Seven” stocks, it wouldn’t be surprising if VOOG continued its stellar performance this year. However, a drawback to this ETF is its high valuation, with an average price-to-earnings (P/E) ratio of 36.5.
In addition to VOOG, Vanguard ETFs focusing on small-cap stocks could also prove to be winners in 2025. The Vanguard Small-Cap ETF (NYSEMKT: VB) stands out as an attractive option in this category. While large-cap stocks have dominated in recent times, historical data suggests that small-cap stocks may offer higher long-term returns.
Potential policy changes under President-elect Trump could further impact ETF performance. Reductions in federal regulations and proposed tax cuts could benefit ETFs like Vanguard Small-Cap and Vanguard Financials, while factors such as interest rate adjustments and tariffs may pose challenges.
Regarding the Vanguard Energy ETF (NYSEMKT: VDE), which holds major oil producers, the impact of increased domestic oil production on stock prices should be considered. Fluctuations in oil prices could influence the performance of this ETF.
Among the Vanguard ETFs, the Vanguard Financials ETF (NYSEMKT: VFH) is highlighted as a top candidate for potential growth. This ETF comprises companies in the financial services sector and demonstrated strong performance in 2024, with notable holdings including JPMorgan Chase and Berkshire Hathaway. The ETF’s attractive valuation and the potential benefits of deregulation and tax cuts under Trump’s administration could contribute to its success in the upcoming year.
Ultimately, selecting the Vanguard ETF with the highest potential for growth in the current economic climate requires careful consideration of various factors, including market conditions, policy changes, and sector performance.
The earnings of these companies could potentially serve as a catalyst for the Vanguard Financials ETF. However, it is important to note that this outcome is not guaranteed. There are various factors that could impact the performance of the Vanguard Financials ETF in the current market environment.
One key consideration is the pace at which Trump’s administration is able to implement promised regulatory reforms. Delays in these efforts could dampen the anticipated positive effects on financial stocks. Additionally, the passage of corporate tax cuts may face challenges, particularly with a slim GOP majority in the House of Representatives. The potential imposition of steep tariffs by the Trump administration could also have a negative impact on financial stocks beyond initial expectations. Other unpredictable events or variables could further influence the performance of the Vanguard Financials ETF.
Despite these uncertainties, there is a sense of optimism about the Vanguard Financials ETF compared to other Vanguard funds in the year ahead. While there is no guarantee that it will emerge as the top-performing fund in the lineup, it is positioned to be competitive.
It is worth considering the decision to invest in Vanguard World Fund – Vanguard Financials ETF carefully. The Motley Fool Stock Advisor analyst team has identified what they believe are the top 10 stocks for investors at present, and the Vanguard Financials ETF did not make the cut. These selected stocks are anticipated to yield significant returns in the foreseeable future. Reflecting on past success stories, such as Nvidia’s inclusion on the list in 2005, where an investment of $1,000 at the time of recommendation could have grown to $832,928, underscores the potential value of strategic investment decisions.
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In full disclosure, JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Speights holds positions in Berkshire Hathaway, Chevron, ExxonMobil, and Mastercard. The Motley Fool also holds positions in and recommends Berkshire Hathaway, Chevron, JPMorgan Chase, Mastercard, and Vanguard Index Funds-Vanguard Small-Cap ETF. Additionally, the Motley Fool recommends specific options related to Mastercard. Transparency and ethical reporting are central to the Motley Fool’s disclosure policy.
