Potential Victory ETF from Vanguard That May Prosper Under Trump's Second Presidential Term
In 2024, bank stocks found themselves in one of the stock market's top-performing sectors. The financial sector, primarily made up of banks, witnessed a remarkable surge of over 30%. With the likelihood of additional Federal Reserve interest rate cuts and a newly installed pro-business administration occupying the White House, future growth potential remains promising.
For investors seeking bank stock exposure, the Vanguard Financials ETF (VFH) is an excellent option to consider. This ETF strives to mirror the overall financial sector's performance, tracking a benchmark index of around 400 companies. Given its weighted index structure, significant companies contribute a more substantial percentage to the ETF's assets.
By the end of 2024, the ETF's notable holdings included JPMorgan Chase (JPM), Berkshire Hathaway (BRK.A and BRK.B), Mastercard (MA), Visa (V), and Bank of America (BAC). Although bank shares form a substantial portion of the ETF's assets, it's worth noting that non-bank companies, such as Berkshire Hathaway, are also represented. There are concentrations in payment processing, insurance, and asset management organizations as well.
The ETF boasts a low expense ratio of 0.1%, which equates to a fee of $1 for every $1,000 invested each year. It should be noted that this fee will ultimately impact the fund's performance over time.
In 2025, numerous positive factors may contribute to another prosperous year for bank stocks. Lower interest rates, being a significant factor, should lead to increased demand for loans and higher margins for financial institutions. Furthermore, President Trump's proposed policies, including deregulation and possible tax cuts, could favorably impact the financial sector.
As a long-term investment, ETFs like VFH may offer appealing growth prospects and profitability. Potential volatility in bank shares is a given, but given the right circumstances, this could be an excellent entry point for those interested in bank stock exposure. Keep in mind that it is essential to allow several years for these investments to mature before considering cashing out.
Enrichment Data Insights:
Performance in 2024: The Vanguard Financials ETF (VFH) showed remarkable growth, reaching a 1-year return of +35.80%. The ETF also delivered a consistent dividend yield of 1.63%, with the most recent ex-dividend date being December 18, 2024.
Top Holdings: Aside from JPMorgan Chase, Berkshire Hathaway, Mastercard, Visa, and Bank of America, the VFH's portfolio includes other prominent companies such as Wells Fargo, The Goldman Sachs Group, and American Express.
Potential Catalysts for Performance in 2025: A combination of factors, including economic growth prospects, rising interest rates, favorable regulations, undervalued financials, and resilient top holdings, suggest that the Vanguard Financials ETF is well-positioned for continued growth in 2025. The overall outlook for fixed income investments in 2025 remains positive, which should support the financial sector.
Sources:
[1] - ETF.com
[2] - Yahoo Finance
[3] - Morningstar.com
Investing in the Vanguard Financials ETF (VFH) can provide excellent exposure to the finance sector, including banks. This ETF aims to replicate the overall performance of the financial sector, with significant companies like JPMorgan Chase and Berkshire Hathaway contributing significantly to its assets.
Managing your finances wisely, including considering investments in bank stocks and ETFs like VFH, can contribute to your overall financial growth.
