Key insights
- The Vanguard Value ETF (VTV) is outperforming the S&P 500 in early 2026 due to its diversified holdings in sectors like financials, energy, and healthcare, contrasting with the S&P 500's heavy tech concentration. This suggests a potential market rotation towards value stocks, offering investors stability and a dividend yield amid tech sector pullback. While the author favors growth long-term, VTV's current performance indicates a short-term bullish signal for value-oriented strategies.
After an impressive 2025 that capped off three straight years of double-digit gains, the S&P 500 has struggled in the new year -- down about 4.6% year to date through March 26, as the broader tech sector has pulled back a bit.
While a lot of attention has been given to the market's struggles, one Vanguard ETF has been moving in the opposite direction: the Vanguard Value ETF (VTV +0.72%). It doesn't have the flash of a tech-heavy or growth ETF, but it's performing nearly 7% better than the S&P 500 to begin this year.
If you want to look at the S&P 500's struggles, you should start with its top holdings because they're responsible for much of it. The "Magnificent Seven" stocks account for nearly a third of the index, and the best-performing one of those so far this year is Apple -- which is down nearly 6%.
On the other hand, VTV is less top heavy and led by a more diversified set of companies. Below is how the top 10 holdings from each compare:
While nine of the S&P 500's top 10 holdings are tech companies, Micron is the only tech company in VTV's top holdings. The rest come from sectors like financial, energy, healthcare, and consumer staples.
These sectors tend to grow at a slower but more stable pace than the tech sector, which is why these companies are ideal for a value ETF like VTV, which seeks companies priced well relative to their earnings.
The S&P 500 has outperformed VTV quite a bit over the past few years while riding the artificial intelligence boom, but VTV is a good go-to when investors are looking for more stability, as we're witnessing now.
You get exposure to many blue chip stocks without relying too heavily on them, a cheap expense ratio (0.03%), and a decent dividend that can help add to gains or hedge a bit against stock price drops. At the time of this writing, VTV's dividend yield is around 2%.
I still believe the S&P 500 or a growth ETF like the Vanguard Growth ETF is a better long-term option for investors looking to grow their portfolio, but VTV could be a productive staple in many investors' portfolios.