Exchange-traded funds (ETFs) have become a popular investing instrument over the last few years. They provide easy and instant access to diversified holdings, they're easy to buy and sell on the market, and they usually have low fees.
Vanguard has become a top player because all of its ETFs track indexes and are passively managed, it has a solid track record of reliability, and it has a low expense ratio. It offers more than 80 different ETFs for all kinds of investors: growth, value, dividend, high risk, low risk, and more.
These are the five best-performing Vanguard ETFs of 2024. Let's go through each one and see if you should buy it today.
1. Vanguard S&P 500 Growth ETF: Up 41%
The Vanguard S&P 500 Growth ETF (VOOG -1.43%) follows the S&P 500 Growth Index, which is made up of the 230 or so growth stocks in the S&P 500. That's less diversification than the benchmark index, but it's still a fair amount of stocks. It has an expense ratio of 0.1%, as compared with an average of 0.95% for similar ETFs.
Since it's a weighted index, its largest stocks, Apple, Microsoft, and Nvidia, alone make up more than a quarter of the whole portfolio. On the one hand, that increases the risk, but on the other hand, it gives investors more exposure to tech trends, especially artificial intelligence (AI).
Even though it's the top-performing ETF right now, it doesn't have the highest risk rating. It has a mark of 4 with 5 being the highest. It also has the second-highest annualized return since inception, in 2007, of 16.4%. That should give investors confidence that this isn't a risky play.
It's well-positioned to continue soaring in 2025 as AI is still a growth driver, and it looks like an excellent choice for any investor except the most risk averse.
2. Vanguard Communication Services ETF: Up 38.9%
The Vanguard Communication Services ETF (VOX -1.12%) 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. 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.
Meta Platforms and Alphabet make up more than 30% of the total. It also has the highest risk rating. However, it has performed very well this year due to tailwinds benefiting the communications industry.
This could be an option for investors who have an appetite for risk, and it has continued tailwinds going into 2025. But I would faster choose a more fully diversified, growth-oriented ETF that presents potential for high gains with more security.
Image source: Getty Images.
3. Vanguard Russell 1000 Growth ETF: Up 38.8%
The Vanguard Russell 1000 Growth ETF (VONG -1.47%) 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, like 2024, it performs exceptionally well. It has an expense ratio of 0.08%, versus 0.95% for similar ETFs.
It has about 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 the highest annualized return of all Vanguard ETFs since inception in 2010 at 17%. That's an excellent return for a safe and highly diversified instrument, and this ETF is a great option for any growth investor.
4. Vanguard Mega Cap Growth ETF: Up 38.3%
The Vanguard Mega Cap Growth ETF (MGK -1.53%) 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. Right now, that's working in its favor, since these companies are benefiting from AI trends. That's likely to continue into 2025.
5. Vanguard Growth ETF: Up 38.2%
The Vanguard Growth ETF (VUG -1.43%) 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.
It's also benefiting from current trends, and it should continue to perform well in 2025. It has a strong long-term track record of 11.7% annualized returns. However, since it has fewer components than some of the other growth ETFs, it's also a bit riskier.
Don't forget the benchmark
I do want to finish by saying that the standard Vanguard S&P 500 ETF (VOO -1.04%) comes in third for highest all-time annualized returns at 14.9% since 2010, beating the other 80 on the list. If you're looking for safety and growth, you might to choose one or two ETFs on this list, but don't forget about the benchmark ETF, which is one of the best for any investor.
