Best Vanguard ETFs for the rest of 2025 | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

2025 has been another banner year for the financial markets. Through the first three quarters of the year, the S&P 500 is up around 15% long-term.

Treasury bonds are up about 5%, and gold has gained nearly 50%. Even international equities, which have long gotten relatively little attention, are up more than 20% in many countries.

The rest of the year might be more complicated. We’re seeing signs that the labor market is cooling off quickly, and consumer demand is beginning to slip. Those conditions tend to correlate with higher volatility in the markets and an increased risk of a pullback in stock prices.

With the government still shut down and the markets entering one of their more historically vulnerable periods, investors might need to be more disciplined regarding where they put their money.

Vanguard offers nearly 100 different ETFs, most of them qualifying as ultra-low cost. That makes the mega-issuer a great place to look for investment options.

Heading into 2026, however, the primary theme may not be buying the S&P 500 and just letting it ride.

Check out the best Vanguard ETFs for the rest of 2025

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Why Vanguard ETFs could lead the market into 2026

The U.S. economy has generally been in a good place since inflation began coming back down to earth in 2023. Many had worried the Fed would keep interest rate policy too tight for too long, risking pushing the U.S. economy into recession.

That hasn’t happened yet. It’s looking like Jerome Powell and the Fed may have achieved the soft landing after all.

But despite the building risks in the labor market and retail space, investors remain bullish. Growth rates and earnings, especially with the AI infrastructure plays, still look healthy.

Plus, the start of what could be a lengthy Fed rate cutting cycle has investors feeling optimistic that valuations could keep expanding in a cheaper money environment.

But despite the building risks in the labor market and retail space, investors remain bullish. Growth rates and earnings, especially with the AI infrastructure plays, still look healthy.

Plus, the start of what could be a lengthy Fed rate cutting cycle has investors feeling optimistic that valuations could keep expanding in a cheaper money environment.

With that in mind, let’s take a look at three Vanguard ETFs that are well-positioned to close out 2025 strong.

Pick 1: Vanguard Growth ETF (VUG)

Growth stocks have firmly been in favor since April, but momentum remains strong. Ever since Liberation Day, equities have largely shaken off any potential downside catalysts, including tariffs, slowing job growth, and stubbornly persistent inflation.

Until we see clearer signs that the economy is slowing down, investors may not be inclined to get rid of what’s worked over the past six months. With GDP growth still looking strong, the unemployment rate still at just over 4%, and the Fed lowering rates, growth stocks still have a number of tailwinds at their back.

Pick 2: Vanguard Small Cap ETF (VB)

Small-caps have pretty consistently lagged large-caps since the start of 2023, but that’s changed lately. Ever since the Fed signaled that it was ready to cut rates, small-caps have outperformed.

Why? Relatively speaking, small companies generally have more debt on their books than large ones and use that in order to fund growth. Therefore, whenever interest rates are falling, small companies enjoy a greater benefit.

If the Fed continues to lower interest rates over the next nine to 12 months, small-caps could finally have the catalyst that extends their current stretch of market leadership.

Pick 3: Vanguard Dividend Appreciation ETF (VIG)

If you expect growth stocks to continue performing well, a dividend ETF might not seem like an intuitive choice. But VIG is an unusual case.

The reason comes down to two factors within the stock selection process:

It requires only a modest 10-year dividend growth history to qualify.
Its market cap weights the portfolio.

Whereas a lot of dividend growth strategies end up targeting more durable and mature companies, VIG’s looser criteria allow more growth companies with emerging dividend track records to qualify.

That results in a 26% allocation to the tech sector, much higher than you’ll find in other dividend growth ETFs.

The cap weighting gives larger allocations to the bigger companies, regardless of their yield or how many years they’ve been paying dividends. That gives an inherent advantage to mega-cap stocks.

Three of VIG’s top four holdings right now are Broadcom, Microsoft, and Apple — not your typical dividend fund!

Key Takeaways:

The market continues to favor growth stocks, despite the labor market slowing.
A Fed rate cutting cycle could keep investors in a bullish mood.
Falling rates could lead small-caps to outperform.
VIG could be a leader among the dividend ETFs.

Final thoughts: Growth stocks are still looking like leaders to close out 2025

Even though stocks, bonds, and gold have all delivered strong gains thus far for investors, there still be more upside ahead. Resilient U.S. economic growth coupled with Fed rate cuts creates conditions favorable for risk assets.

VUG, VB, and VIG could all be big beneficiaries.