You don’t have to pick individual stocks to achieve great returns. Exchange-traded funds (ETFs) allow you to invest in a basket of stocks in one fell swoop. And Vanguard ETFs, in particular, come with low costs that don’t eat into your profits very much.
Four Vanguard ETFs soared over 20% in the first half of 2024. And one could be most likely to fly even higher.
Four high-flying Vanguard ETFs
The best-performing Vanguard ETF so far this year is the Vanguard S&P 500 Growth Index Fund ETF (NYSEMKT: VOOG). This fund focuses on large-cap growth stocks in the S&P 500 index. It’s up close to 24% year to date. This level of performance isn’t unusual. Since its inception in September 2010, the Vanguard S&P 500 Growth Index Fund has delivered an average annual return of 16.17%.
The Vanguard Mega Cap Growth Index Fund ETF (NYSEMKT: MGK) isn’t too far behind with a year-to-date gain of 22%. This ETF owns 79 of the largest U.S. growth stocks. The average market cap of these stocks is $1.8 trillion.
Two other Vanguard funds are neck-and-neck. Both the Vanguard Russell 1000 Growth Index Fund ETF (NASDAQ: VONG) and the Vanguard Growth Index Fund ETF (NYSEMKT: VUG) are up around 21% this year.
The Vanguard Russell 1000 Growth Index Fund ETF tracks the Russell 1000 Growth Index. This ETF holds positions in 440 stocks. The Vanguard Growth Index Fund ETF tracks the CRSP U.S. Large Cap Growth Index and owns 199 stocks.
Common denominators
These four Vanguard ETFs share several common denominators (other than that they’re all operated by Vanguard and have generated big gains in 2024). You might have noticed the word “growth” in all of the funds’ names. That’s no coincidence. Growth stocks have performed exceptionally well this year. It makes sense, therefore, that the Vanguard ETFs that primarily own growth stocks would also be up significantly.
The specific growth stocks these funds own are quite similar as well. Microsoft, Apple, Nvidia, Amazon, and Meta Platforms rank as the top five holdings for all five top-performing Vanguard ETFs.
Although the fifth- through tenth-largest positions in these ETFs aren’t exactly the same, they include several of the same stocks. Alphabet, Eli Lilly, and Tesla are in the top 10 for all four of these soaring Vanguard ETFs.
Unsurprisingly, all of these ETFs also have low costs. The Vanguard S&P 500 Growth ETF’s annual expense ratio is 0.10%. The Vanguard Russell 1000 Growth ETF’s expense ratio is 0.08%, followed closely by the Vanguard Mega Cap Growth ETF with an expense ratio of 0.07%. The cheapest of the group, though, is the Vanguard Growth ETF with an annual expense ratio of only 0.04%.
Which Vanguard ETF is most likely to fly even higher?
I think all four of these Vanguard ETFs could continue to perform well throughout the rest of 2024. It’s hard to choose which is the most likely to fly even higher because of the similarity in their top holdings. However, if I had to pick only one it would be the Vanguard Russell 1000 Growth ETF.
My rationale behind choosing this Vanguard ETF boils down mainly to the possibility of an interest rate cut later this year. The stocks of companies with smaller market caps tend to respond more to rate cuts than those with larger market caps do. The Vanguard Russell 1000 Growth ETF’s portfolio stocks have the lowest average market cap of these four top performers.
This ETF also owns the largest number of stocks in the group by far. While it would benefit if the mega-cap leaders of the first half of the year continue to do well, it also has more shots on goal with plenty of other stocks that are relatively smaller (although they’re all still large-cap stocks).
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Tesla, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
These 4 Vanguard ETFs Soared Over 20% in the First Half of 2024. Here’s Which One Is Most Likely to Fly Even Higher. was originally published by The Motley Fool
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