1 Top ETF I Plan to Load Up on in 2026
1 Top ETF I Plan to Load Up on in 2026
David Dierking, The Motley FoolTue, March 31, 2026 at 6:36 AM UTC
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Key Points -
The U.S. stock market has been dominated by tech and growth stocks over the last three years.
That's changed this year as value, defensive, dividend, and small-cap stocks have outperformed.
The conditions that triggered this rotation are likely to continue throughout the rest of 2026.
10 stocks we like better than Vanguard Value ETF ›
There's little question that tech and growth stocks have driven the S&P 500 (SNPINDEX: ^GSPC) higher for the past several years, but 2026 provided a reminder that this won't always be the case.
As economic conditions evolved, the market rotated away from previous winners and into value, defensive, dividend, and small-cap stocks. The outperformance of these groups has moderated somewhat in the past few weeks, but overall investor sentiment has clearly shifted.
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With the U.S. economy showing signs of slowing and valuations becoming a concern, I feel that there's plenty of room for these categories to continue outperforming the broader market. That's why one fund I plan to add to my portfolio this year is the Vanguard Value ETF (NYSEMKT: VTV).
A hand drawing a scale with price and value on opposite sides.
Image source: Getty Images.
As of March 26, the Vanguard Value ETF was beating the S&P 500 by roughly 7 percentage points for the year. That's been accomplished despite parts of the fund's sector allocation being out of favor. Its top three sectors are financials (21%), industrials (17%), and healthcare (14%). Financials and healthcare have been among the worst-performing sectors.
Financials have lagged due to a challenging interest rate environment and weaker loan demand. But they also tend to do better when the rate curve begins to steepen. That's happening right now as the 10Y/3M Treasury yield spread is at its highest level since 2022. If inflation risk continues pushing long-term yields higher, it could improve profit margins.
Healthcare stocks have struggled due to a combination of inflation and rising policy risks. But this sector tends to outperform during broader risk-off environments. The durable demand for its products and services despite the economic environment is usually attractive to those seeking more safety from equities.
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In short, I think the environment for value stocks will continue improving throughout 2026. And that makes the Vanguard Value ETF a great fund to consider adding.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Value ETF. The Motley Fool has a disclosure policy.
Source: “AOL Money”
