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2024 has been a remarkable year for stocks, with the S&P 500 up 24.7% as of November 21. Surprisingly, the top-performing Vanguard ETF is not from the tech sector but rather the Vanguard Financials Index Fund ETF, which has surged 33.6% year to date. This performance is attributed to the financial sector's cyclical nature and favorable economic conditions.
The Vanguard Financials ETF's strong performance is driven by major holdings in banks and credit card companies, alongside Berkshire Hathaway. With expectations of a supportive economic environment and potential tax cuts from the incoming administration, financial stocks are positioned for continued growth. Although repeating this success in 2025 may be challenging, the ETF remains a promising investment.
• Vanguard Financials ETF outperformed tech stocks in 2024.
• Financial stocks benefit from high interest rates and economic growth.
Cyclical stocks, like those in the financial sector, thrive during economic expansions.
The Vanguard Financials ETF has a favorable P/E ratio compared to the broader market.
6% over the last five years.
Berkshire Hathaway is a major holding in the Vanguard Financials ETF, contributing to its performance.
Wells Fargo's potential asset cap lift is a key factor for investor optimism in financial stocks.
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