Uncovering the Five Outstanding Vanguard ETFs from 2024's Market Performance: Which Remain Worthy Investments?
ETFs, or Exchange-traded funds, have gained popularity in recent years due to their convenience and low fees. Vanguard, in particular, stands out for offering a wide range of ETFs that track various indexes and are passively managed. With an expense ratio of 0.1%, Vanguard's S&P 500 Growth ETF, VOOG, is one of the most affordable options out there. Despite being less diversified than the benchmark index, it has performed exceptionally well, with a 41% increase in 2024.
The top-performing ETF of 2024 is the Vanguard S&P 500 Growth ETF, which follows the S&P 500 Growth Index. It's made up of the 230 or so growth stocks in the S&P 500, with an expense ratio of 0.1%. Despite its risk rating of 4, it's considered a safe choice for investors due to its high annualized return of 16.4% since 2007 and its exposure to tech trends, especially AI.
1. Vanguard S&P 500 Growth ETF: Up 41%
The VanguardS&P 500 Growth ETF (VOOG -0.86%) follows the S&P 500 Growth Index, which is made up of the 230 or so growth stocks in the S&P 500. With an expense ratio of 0.1%, it's a cost-effective option that has performed exceptionally well, with a 41% increase in 2024.
Despite its lower degree of diversification compared to the benchmark index, it still represents a fair number of stocks. Despite having a risk rating of 4, it's considered a safe choice for investors due to its high annualized return of 16.4% since 2007 and its exposure to tech trends, especially AI.
2. Vanguard Communication Services ETF: Up 38.9%
The Vanguard Communication Services ETF (VOX -0.58%) tracks the MSCI US Investable Market Communication Services 25/50 Index. It has about 118 stocks, making it one of the least diversified Vanguard ETFs. It has an expense ratio of 0.1% vs. 0.85% for similar ETFs.
Despite its performance this year, it hasn't been one of Vanguard's best-performing ETFs over the long term, with an annualized gain of 8.4% since 2004. That's below the S&P 500. It has a high risk rating and is mainly composed of Meta Platforms and Alphabet, making up more than 30% of the total.
This could be an option for investors who have an appetite for risk, but a more fully diversified, growth-oriented ETF that presents potential for high gains with more security might be a better choice.
3. Vanguard Russell 1000 Growth ETF: Up 38.8%
The VanguardRussell 1000 Growth ETF (VONG -0.87%) tracks the Russell 1000 Growth Index, which is a group of the largest growth companies in the U.S. by market capitalization. It's incredibly diversified, and in a good year, it performs exceptionally well. It has an expense ratio of 0.08%, versus 0.95% for similar ETFs.
It has approximately 385 stocks, larger than the S&P Growth Index, but the top three stocks -- Apple, Nvidia, and Microsoft -- make up more than 30% of the total. It also has a risk rating of 4.
This ETF has an annualized return of 17% since inception in 2010, making it a great option for any growth investor. It's a well-balanced and safe option for investors who are aiming for high returns while minimizing their risk.
4. Vanguard Mega Cap Growth ETF: Up 38.3%
The VanguardMega Cap Growth ETF (MGK -0.95%) tracks the CRSP US Mega Cap Growth Index, and it has only 71 stocks right now. It takes only the largest companies on the stock market, but it only has a risk rating of 4, because many of the largest stocks are established and stable instead of young and risky. It has an expense ratio of 0.07% vs. 0.95% for similar ETFs.
Since there are relatively few stocks in this ETF, the larger ones count for an even higher portion of the total. Apple, Microsoft, Nvidia, and Amazon make up nearly 45% of the total. While this ETF has performed well this year, it's worth considering its risk level and its focus on a limited number of stocks.
5. Vanguard Growth ETF: Up 38.2%
The VanguardGrowth ETF (VUG -0.91%) tracks the CRSP US Large Cap Growth Index. It comprises about 180 growth stocks and has a risk rating of 4. It has the lowest expense ratio on this list at 0.04% versus 0.95% for similar funds. It's an all-around great choice that has the same top components as the other growth stocks on this list but it's a bit cheaper.
Despite its lower expense ratio, it's worth considering its risk level and its focus on a limited number of stocks. However, it's a strong option for investors who are looking for a cost-effective way to gain exposure to the growth stocks on this list.
This piece is also capitalizing on recent trends and is expected to maintain its momentum in 2025. It boasts an impressive long-term performance history, boasting an average annualized return of 11.7%. However, its fewer components compared to other growth ETFs make it slightly more hazardous.
Don't neglect the benchmark
Let me wrap this up by mentioning that the classic Vanguard S&P 500 ETF (VOO, down 0.40%) ranks third among all-time highest annualized returns at 14.9% since 2010, outperforming the other 80 on the list. If you're after a solid balance of safety and growth, you might want to consider opting for one or two ETFs from this list, but remember to keep an eye on the benchmark ETF. It's a go-to option for investors, often delivering outstanding results.
- For those looking to invest in growth stocks within the tech sector, Vanguard's S&P 500 Growth ETF (VOOG) is an excellent choice due to its focus on AI-related companies and its high annualized return of 16.4% since 2007.
- Managing your finance wisely can include diversifying your portfolio with various investment instruments. Vanguard, known for its low-cost ETFs, offers the Vanguard Mega Cap Growth ETF (MGK), which focuses on the largest and most stable growth companies in the market, reducing the overall risk.
