3 Vanguard ETFs to Load Up On Before February

The Vanguard portfolio of ETFs are expected to boom over the course of the next year. That is, if the company’s research on where the market is headed is correct.

Investor preferences have increasingly tilted toward exchange traded funds (ETFs), with Vanguard’s overarching view being that this trend will continue. With a more accommodative macro backdrop (inflation stabilizing and interest rates heading lower), expectations are that stocks could broadly continue to rally. That is, until recessionary headwinds form or some sort of shock rails the market.

Outside of the pandemic, investors have had a rather uninterrupted rally in equity markets many experts believe will continue. And with the U.S. stock market generally perceived to be the cleanest shirt in a laundry basket of options available to investors, there’s reason to take the experts at their word, at least for now.

Despite some short-term volatility in the markets (which is good for those looking to add to their portfolio), the consensus is that investors can expect long-term growth to average around 7-8% per year via investing in index funds. Here are three of the top options I think are worth considering before we turn the calendar to the second month of fiscal 2025.

Key Points About This Article:

• Investing in exchange trade funds is one of the top ways active and passive investors can gain the lowest-cost diversification in the market.
• Some ETFs may be more suitable to certain investors than others, and these three appear to be great buys for long-term investors right now.
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Vanguard Total Stock Market Index Fund ETF (VTI)

One of the top ETFs I’ve continued to pound the table on over the past years is the Vanguard Total Stock Market Index Fund ETF (VTI). This particular ETF stands out as a compelling investment choice for 2025 for a number of reasons, but I think the most important attribute VTI brings to the table is the ETF’s incredibly broad diversification it provides at a rock-bottom expense ratio.

With an expense ratio of just 3 basis points (0.03%), investors can gain exposure to the entire U.S. stock market (more than 4,000 stocks spread across various market capitalizations). Thus, investors won’t be unduly or heavily weighted toward the largest growth stocks (in the tech sector), providing more stable returns during times like these (given this week’s decline in various mega-cap chip stocks).

Buying the market via an index fund such as VTI certainly isn’t for everyone. There are plenty of stock pickers out there, and that’s certainly a strategy that can work for investors who put the time and energy into understanding their core holdings and paying the right price while holding over a reasonably long time frame. But for those seeking a more “set it and forget it” investment plan, simply allocating a certain amount of capital toward a fund like VTI and letting it grow over time may produce the most consistent results.

Vanguard Growth Index Fund ETF (VUG)

For investors who are looking to tilt their portfolio a little more toward higher-growth stocks, the Vanguard Growth Index Fund ETF (VUG) is an excellent option to consider. Of course, during risk-off periods of time (such as what we’ve seen materialize of late), VUG may underperform other large index funds such as VTI. But for investors who are maybe a bit younger and willing to accept this risk, taking a position in a fund like VUG has paid above-market returns in recent years.

Indeed, I think investors who consider growth-oriented index funds such as VUG ought to be aware of the underlying volatility and higher beta these index funds provide. Again, they’re suitable to certain investors who are willing to buy and hold for long enough (they’re not for everyone). But during downturns and market selloffs, it’s also true that taking on a larger position in such funds has the potential to accelerate returns over time for those who can tolerate the risk. In a well-diversified portfolio, there’s certainly reason to hold such a fund which inherently holds higher weightings for mega-cap tech stocks such as Microsoft, Apple and other tech giants relative to the overall market.

With an expense ratio of 0.04%, VUG is another ultra-low-cost index fund from a fee perspective. The ability to take advantage of these rock-bottom fees shouldn’t be lost on investors, given the underlying costs associated with rebalancing (most notably the time and effort that would go into adjusting positions on a frequent basis).

Given the start to the year for growth stocks in 2025, VUG may not provide the same 37.7% return it did in 2024. However, these kinds of outsized returns can more than make up for market selloffs, and this is a fund that may be worth considering on the most recent dip. That goes double for investors who fully buy into the soft-landing narrative and the idea that U.S. growth stocks can continue to perform well in the years to come.

Vanguard Consumer Discretionary Index Fund ETF (VCR)

The Vanguard Consumer Discretionary Index Fund ETF (VCR) is an ETF which provides investors with the ability to gain outsized exposure to consumer discretionary stocks. The good news is that many of the highest-quality blue-chip companies on most indices happen to be in this sector. And given the fact that consumer spending continues to make up the vast majority of the GDP of most developed nations, gaining exposure to strong underlying secular growth trends has certainly provided the kind of robust performance most long-term investors are after.

VCR is an ETF which provides heavy exposure to companies like Amazon, Tesla and Home Depot (these three companies comprise more than 45% of this fund’s holdings. So, for investors after exposure to such stocks, this basket of companies in the consumer discretionary space may be the best way to play this group.

In recent years, VCR has tracked the return of the overall S&P 500 at a high correlation, but investors who believe that consumer discretionary stocks could tick up with an improving economy under a Trump administration may want to give this particular ETF a look.

Indeed, with ongoing shifts in consumer behavior and spending patterns post-pandemic, VCR is well-positioned to capitalize on these trends. These factors and others makes VCR an attractive ETF for investors to own in 2025.