Don't discount the power of momentum. Some studies have found that momentum trading -- buying stocks or exchange-traded funds (ETFs) that are going up -- often works over the short to medium term.
So what is going up these days? These Vanguard ETFs show where the smart money is moving now.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
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Outside the U.S.
Three of the five top-performing Vanguard ETFs of 2025 so far share a key common denominator: They're all international funds. This indicates that much of the smart money is migrating outside the U.S.
The Vanguard FTSE Europe ETF (NYSEMKT:VGK) is the biggest winner year to date with a gain of around 11%. This ETF owns 1,269 stocks, all of which are based in European countries including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
Europe isn't the only destination for investors' cash. The Vanguard FTSE Developed Markets ETF (NYSEMKT:VEA) owns many European stocks. However, its portfolio also includes the stocks of companies based in Canada, the Pacific region, and a few in the Middle East. This Vanguard ETF has jumped nearly 7% in 2025.
Many investors appear to be especially seeking income from stocks of companies headquartered outside of the U.S. The Vanguard International High Dividend Yield ETF (NASDAQ:VYMI) is another top performer in the Vanguard family with a year-to-date gain of roughly 6.5%. This ETF owns 1,498 international stocks that pay above-average dividend yields.
Safe havens
The smart money isn't just flowing off-shore; it's also flocking to safe havens. Investors could be concerned about the potential negative impacts of U.S. tariffs, especially the prospects that they could lead to higher inflation and no further interest rate cuts.
Whatever the reasons may be, the Vanguard Extended Duration Treasury ETF (NYSEMKT:EDV) is delivering the second-highest gains of any Vanguard ETF so far in 2025. This fund owns long-term U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities), bonds that allow buying and selling the interest and principal of a U.S. Treasury bond separately. U.S. Treasury STRIPS are widely viewed as one of the safest investments around. The 30-day SEC yield (the current market yield to maturity of bonds divided by total assets) of this Vanguard ETF is a juicy 4.68%.
The Vanguard Health Care ETF (NYSEMKT:VHT) is also attracting plenty of interest. As its name indicates, this Vanguard ETF focuses on the healthcare sector. Its portfolio includes 416 healthcare stocks, with top holdings including Eli Lilly, UnitedHealth Group, AbbVie, Johnson & Johnson, and Merck. Healthcare stocks typically hold up relatively well when the market is highly volatile.
Consumer staples stocks have been a favorite investing safe haven for decades. Unsurprisingly, the Vanguard Consumer Staples ETF (NYSEMKT:VDC) ranks among the top-performing Vanguard ETFs of the year so far with a gain of 5.4%. This fund owns 103 consumer staples stocks with its top holdings including Costco Wholesale, Walmart, Procter & Gamble, The Coca-Cola Company, and Philip Morris.
Should you follow the money?
There's no guarantee that these Vanguard ETFs will continue to outperform throughout the rest of the year. Many momentum traders are keenly aware of the adage, "The trend is your friend... until it ends."
That said, having exposure to international stocks in your portfolio isn't a bad idea. With significant uncertainty hovering over the stock market right now, parking some of your money in safe havens such as U.S. Treasury bonds (including STRIPS), healthcare stocks, and consumer staples stocks could be a prudent move as well. The Vanguard ETFs mentioned earlier provide easy and cost-effective vehicles for investing in international stocks and safe havens.
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*Stock Advisor returns as of February 28, 2025
Keith Speights has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie, Costco Wholesale, Merck, Vanguard Tax-Managed Funds-Vanguard Ftse Developed Markets ETF, and Walmart. The Motley Fool recommends Johnson & Johnson, Philip Morris International, and UnitedHealth Group. The Motley Fool has a disclosure policy.
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