We’re almost halfway through 2024 and the good news for investors is that the S&P500 is on its way to another strong performance. After rising 24% in 2023, the widely followed index is up about 10.5% so far this year.
However, investors could have earned even better returns with some exchange-traded funds (ETFs). These six Vanguard ETFs are beating the S&P 500 so far in 2024.
A common denominator for several
The Vanguard S&P 500 Growth Index Fund ETF (NYSEMKT: VOOG) has beaten the S&P 500 this year with a gain of almost 15.7%. As the name suggests, this ETF focuses on growth stocks from the S&P 500.
There are a lot of them, since this ETF holds 229 shares. Top positions include: Microsoft, AppleAnd Nvidia.
You’ll likely notice a common denominator among some of the best-performing Vanguard ETFs: they focus on large companies with exceptional growth prospects.
The Vanguard Mega Cap Growth Index Fund ETF (NYSEMKT: MGK) owns the largest of the major growth stocks with a market cap of nearly $200 billion or more. There are just 79 stocks in the portfolio, which notably includes the same three tech giants at the top of the Vanguard S&P 500 Growth Index Fund ETF. This ETF is up about 13.5% year to date.
The Vanguard Growth Index Fund ETF (NYSEMKT: VUG) hot on its heels with a gain of 13.3% so far in 2024. This ETF attempts to track the performance of the CRSP Growth of US large caps Table of contents. It owns 200 stocks with the same top holdings as the aforementioned Vanguard ETFs.
The Vanguard Russell 1000 Growth Index Fund ETF (NASDAQ: VONG) is not far behind, with a return of around 13.2% this year. The ETF owns 440 shares in the Russell 1000 Growth Table of contents. Unsurprisingly, the top holdings also include Microsoft, Apple and Nvidia.
Two exceptions
Not all Vanguard ETFs that beat the S&P 500 focus on large-cap growth stocks. There are two exceptions.
The Vanguard Utilities Index Fund ETF (NYSEMKT: VPU) is perhaps the most unexpected winner in the group. It owns 65 utilities, including top positions NextEra Energy, Southern Co.And Duke Energy.
While utility stocks don’t always keep pace with growth stocks, this Vanguard ETF has returned about 12.5% so far this year. Its total returns, including dividends, outperform all but two other Vanguard ETFs on our list.
Megacap stocks are generally defined as stocks with a market capitalization of at least $200 billion. The Vanguard Mega Cap Index Fund ETF (NYSEMKT:MGC) takes a different approach and owns US stocks representing roughly the top 70% of market capitalization. The portfolio includes 207 shares.
While it doesn’t exclusively own growth stocks, the ETF’s top holdings mirror those of the Vanguard ETFs that focus on large growth stocks. The Vanguard Mega Cap Index Fund ETF is up about 11.6% year to date.
The best of the bunch
Which of these Vanguard ETFs will be the best of the bunch going forward? It will probably depend largely on how the US economy fares.
If the economy remains strong, I think the Vanguard S&P Growth Index Fund could remain the best Vanguard ETF. It’s well diversified, with more stocks in the portfolio than any other ETF on the list except the Vanguard Russell 1000 Growth Index Fund ETF. The shares in the Vanguard S&P Growth Index Fund have also delivered the strongest earnings growth of these six Vanguard ETFs over the past five years.
However, if the U.S. economy starts to struggle, the Vanguard Utilities Index Fund ETF will likely outperform the others. Utility stocks are often seen as safe havens during economic downturns. The attractive dividend yields of many of the stocks in the Vanguard Utilities Index Fund ETF will also boost the ETF’s total return.
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Keith Speights has positions at Apple and Microsoft. The Motley Fool holds positions in and recommends Apple, Microsoft, NextEra Energy, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends Duke Energy and recommends the following options: long January 2026 $395 calls at Microsoft and short January 2026 $405 calls at Microsoft. The Motley Fool has a disclosure policy.
These six Vanguard ETFs are beating the S&P 500 so far in 2024. This is the best of the bunch. was originally published by The Motley Fool
