Wall Street Predicts Continued Growth for the S&P 500 – But Here Are Two Vanguard ETFs That May Outperform
Many analysts on Wall Street believe that the S&P 500 is poised to rise for a third straight year in 2025, with projections indicating an increase around 10%. Currently, the index is already about one-third of the way toward this target.
If these predictions hold true, investors looking for exposure can consider the S&P 500 index exchange-traded fund (ETF) like the Vanguard S&P 500 ETF (NYSEMKT: VOO) for a reasonable return. However, I believe there are even better options for those seeking higher gains, specifically two Vanguard ETFs likely to outperform the S&P 500 this year.
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Vanguard Financials ETF: A Strong Contender
The Vanguard Financials ETF (NYSEMKT: VFH) stands out as the top pick likely to outperform the S&P 500 in 2025. This ETF specializes in companies from the financial services industry.
Currently, the Vanguard Financials ETF holds 409 financial stocks, with major investments in JPMorgan Chase, Berkshire Hathaway, Mastercard, Visa, and Bank of America, which collectively make up 30.7% of its total portfolio.
Since its launch in January 2004, this fund has averaged an annual return of 6.7%. Recently, however, it has significantly outperformed the S&P 500 over the last year.
^SPX data by YCharts
Notably, the Vanguard Financials ETF began to lead the S&P 500 starting in November 2024, coinciding with the U.S. elections. The expected policies from a potential second Trump administration might favor financial stocks, primarily by reducing regulatory burdens.
Vanguard S&P 500 Growth ETF: Riding the Wave of Innovation
In 2024, the Vanguard S&P 500 Growth ETF (NYSEMKT: VOOG) was the best-performing Vanguard ETF, boasting a growth of over 31% in the past year, outpacing the S&P 500’s 23% increase.
^SPX data by YCharts
The Vanguard S&P 500 Growth ETF aims to replicate the performance of the S&P 500 Growth Index, focusing on growth-oriented companies. This fund manages 209 stocks with a median market cap of $1.1 trillion. Leading companies include Nvidia, Apple, Microsoft, Meta Platforms, and Amazon—all of which have outperformed the S&P 500 recently.
Will this growth continue? Many believe so, as the ongoing demand for artificial intelligence (AI) supports numerous top growth stocks. While there have been concerns recently regarding the Chinese AI company DeepSeek causing stock fluctuations, particularly for Nvidia, these setbacks are expected to be temporary.
Potential Dark Horses
While I have confidence in the Vanguard Financials ETF and the Vanguard S&P 500 Growth ETF, other Vanguard options could outshine them as well. For instance, the Vanguard Growth ETF (NYSEMKT: VUG) demonstrated strong performance in 2024 and may continue to excel.
Additionally, small-cap stocks might soon outperform large-cap ones, suggesting that funds like the Vanguard Small Cap ETF (NYSEMKT: VB) and Vanguard Small Cap Value ETF (NYSEMKT: VBR) could achieve impressive returns.
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*Stock Advisor returns as of February 3, 2025
JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. 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 Amazon, Apple, Berkshire Hathaway, Mastercard, Meta Platforms, Microsoft, Vanguard S&P 500 ETF, and Vanguard Small-Cap Value ETF. The Motley Fool has positions in and recommends Amazon, Apple, Bank of America, Berkshire Hathaway, JPMorgan Chase, Mastercard, Meta Platforms, Microsoft, Nvidia, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Small-Cap ETF, Vanguard S&P 500 ETF, and Visa. 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
