Top Vanguard Index Funds of 2024: A Closer Look at VFH and VOOG

In 2024, two standout Vanguard index funds have captivated investors with their impressive performance. The Vanguard Financials ETF (VFH) and the Vanguard S&P 500 Growth ETF (VOOG) have both returned over 30% year-to-date, making them two of the best-performing Vanguard index funds this year. Let's delve into the factors driving their success and the potential impact on their future performance.

The Vanguard Financials ETF (VFH) has been the top-performing Vanguard index fund in 2024, with a remarkable 34% return. This impressive performance can be attributed to the financial sector's strong showing, driven by relatively reasonable valuations and expectations of banking industry deregulation under President-elect Donald Trump. The ETF's top holdings, including JPMorgan Chase, Berkshire Hathaway, Mastercard, Visa, and Bank of America, represent a diversified selection of blue-chip stocks that have contributed to its success.



While the Vanguard Financials ETF (VFH) has outperformed the market in 2024, its five-year return of 84% still trails the S&P 500's 105%. Additionally, the ETF has an expense ratio of 0.1%, which is higher than many S&P 500 index funds. As investors consider the potential impact of financial sector trends and the ETF's fee structure, it is essential to evaluate its future performance prospects.



The Vanguard S&P 500 Growth ETF (VOOG) has also demonstrated impressive returns, with a 33% year-to-date increase. The fund's growth is driven by its heavy exposure to technology (50%) and consumer discretionary (14%) sectors. Its top holdings, including Apple, Nvidia, Microsoft, Amazon, and Meta Platforms, have significantly contributed to its performance.



However, the Vanguard S&P 500 Growth ETF's (VOOG) heavy exposure to technology and consumer discretionary sectors presents potential risks and challenges. As these sectors account for nearly two-thirds of the fund's composition, they are vulnerable to market fluctuations and regulatory changes. To mitigate risks, investors should consider diversifying their portfolios with other sectors and funds, while maintaining a long-term perspective on the growth potential of these tech giants.

In conclusion, the Vanguard Financials ETF (VFH) and the Vanguard S&P 500 Growth ETF (VOOG) have both demonstrated impressive performance in 2024. While each fund has its unique characteristics and risks, they offer investors exposure to blue-chip stocks and sector-specific trends. As investors evaluate these funds for their portfolios, they should consider the potential impact of financial sector trends, regulatory changes, and market fluctuations on their future performance. By adopting a balanced and analytical approach, investors can make well-informed decisions and capitalize on the opportunities presented by these top-performing Vanguard index funds.