Tech and AI stocks have been successful, but the rally may lose steam soon.
A glance at the returns for the S&P 500 and Nasdaq-100 in 2025 would create the impression that the markets did pretty well. In reality, the biggest gains were mostly restricted to tech, large-cap, and growth stocks. If you invested in value stocks, dividend stocks, or almost anything defensive, you were probably disappointed by 2025’s returns.
As we head into 2026, conditions still look favorable for more gains in stocks. But the composition of the stocks making those gains might start to look different. Most indicators suggest the U.S. economy continues to grow. Overall inflation is relatively contained, even if it’s inching up a bit and not getting back to the Fed’s 2% target. The unemployment rate is still low compared to historic averages (although some signs point to it rising as well). All in all, it’s a somewhat positive economic backdrop.
Investors may be tempted to push further into tech and artificial intelligence (AI) stocks, but there are some questions about valuation and the ability to sustain their red-hot momentum. The market is starting to look for alternatives. If the U.S. stock market continues to broaden, we could be looking at an all-new set of leaders in the new year.
Here are three Vanguard stock ETFs that could take advantage of all these moving pieces and potentially lead the market higher in 2026.
Image source: Getty Images.
1. Vanguard Mid-Cap Value ETF
If your portfolio is heavily invested in large-caps and tech stocks, the mid-cap value category might seem like a 180-degree turn, but let’s make the case for the Vanguard Mid-Cap Value ETF (VOE +0.89%).
With equities, most investors just look at large-cap vs. small-cap and ignore mid-caps. In reality, mid-cap stocks offer a solid growth profile but without the risk that comes with so many unprofitable companies within the Russell 2000. Economic growth is expected to moderate, but mid-caps could be a natural landing spot if investors rotate out of large-caps during a slowdown.
The value sleeve of this group could be particularly attractive because it includes a lot of the cyclical exposures that tend to benefit in positive growth environments. The ETF’s largest two sector allocations — industrials (17.4%) and financials (15.1%) — have shown signs of life throughout 2025, and the fund’s P/E ratio of 18 is well below the 28 multiple of the S&P 500.
Vanguard Index Funds – Vanguard Mid-Cap Value ETF
Today’s Change
(0.89%) $1.59
Current Price
$181.09
Key Data Points
Market Cap
$0B
Day’s Range
$179.50 – $181.43
52wk Range
$139.38 – $181.43
Volume
536K
Avg Vol
0
Gross Margin
0.00%
Dividend Yield
N/A
2. Vanguard High Dividend Yield ETF
After three years of lagging the market, dividend stocks might finally have a chance to recapture the spotlight.
The Vanguard High Dividend Yield ETF (VYM +0.68%) is one of the most popular choices. Its relatively simple selection strategy of including above-average yielding stocks from a broad U.S. stock universe gives the portfolio some pop without the full shift to defense.
Its largest sector allocations include financials (21.1%), technology (14.1%), industrials (13.5%), and healthcare (12.3%). Industrials are actually outperforming the S&P 500 year to date (through Dec. 8, 2025), and healthcare has been one of the market’s best-performing sectors during the second half of the year. Investors have already migrated to these sectors as tech stocks have moderated, and that trend could continue into 2026.
Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF
Today’s Change
(0.68%) $1.00
Current Price
$147.79
Key Data Points
Market Cap
$0B
Day’s Range
$146.57 – $147.88
52wk Range
$112.05 – $147.88
Volume
227
Avg Vol
0
Gross Margin
0.00%
Dividend Yield
N/A
3. Vanguard Emerging Markets ex-China ETF
Let’s dig deep into the Vanguard lineup for our final pick.
The Vanguard Emerging Markets ex-China ETF (VEXC 0.27%) only launched earlier this year, but it sits in the sweet spot for international stock potential right now. Emerging markets finally had a big year in 2025 as easing financial conditions unlocked some of the value that’s built up over the years. Even after this year’s rally, the fund’s P/E of just 17 is still roughly 40% below that of the S&P 500, meaning there’s more value to be had.
The decision to exclude is one based on caution. The manufacturing sector in that part of the world is still struggling mightily, and we have yet to understand the full fallout from China’s real estate crisis. There’s high potential in China if the economy is nearing a bottom, but there’s a lot of risk if it isn’t. Better to capture the emerging markets exposure, but avoid the uncertainty of that region if possible.
Vanguard World Fund – Emerging Markets Ex-China ETF
Today’s Change
(-0.27%) $-0.21
Current Price
$79.01
Key Data Points
Market Cap
$0B
Day’s Range
$78.58 – $79.26
52wk Range
$74.97 – $79.80
Volume
8.5K
Avg Vol
0
Gross Margin
0.00%
Dividend Yield
N/A
Bonus pick: Vanguard Total Stock Market ETF
If you’ve read this and you’re still a little leery about moving away from the S&P 500, the Vanguard Total Stock Market ETF (VTI +0.34%) could be a compromise. You keep your heavy large-cap exposure, but add a modest mid-cap and small-cap allocation to the mix. It’s a slight tilt away from the S&P 500 index, but not a major one. And it gives you the opportunity to capture the potential of an undervalued area of the market.