Meet the 2 Best-Performing Vanguard Index Funds of 2025

Core Insights - Vanguard index funds tracking European and international stocks have shown strong performance in 2023, attributed to changes in U.S. trade and fiscal policy [1] - The Vanguard FTSE Europe ETF and Vanguard FTSE Developed Markets ETF have gained 29% and 28% year to date, respectively, outperforming the S&P 500 by 15 and 14 percentage points [4][8] - Despite recent outperformance, European and international stocks have historically underperformed U.S. stocks over longer periods [4][8] Vanguard FTSE Europe ETF - The Vanguard FTSE Europe ETF tracks over 1,200 stocks in major European markets, with significant weight in the U.K., France, and Germany, and sectors like financials, industrials, and healthcare [4] - The ETF has gained 29% year to date, but over the last five years, it has only added 53%, lagging behind the S&P 500 by 43 percentage points [4] - The expense ratio for the Vanguard FTSE Europe ETF is 0.06%, significantly lower than the average of 0.81% for similar funds, making it an attractive option for investors [5] Vanguard FTSE Developed Markets ETF - The Vanguard FTSE Developed Markets ETF measures over 3,800 companies in developed international markets, with a focus on Europe and the Asia-Pacific [7] - This ETF has advanced 28% year to date, also outperforming the S&P 500, but has only gained 46% over the last five years, trailing the S&P 500 by 50 percentage points [8] - The expense ratio for this ETF is 0.03%, compared to an average of 0.85% for similar funds, providing a cost-effective option for diversified international exposure [9] Market Trends and Analysis - The U.S. dollar has depreciated by about 11% in the first half of the year, benefiting international stock investments when measured in U.S. dollars [11] - Diverging monetary policies, with the European Central Bank cutting rates while the U.S. Federal Reserve held steady, have influenced investor preferences towards international equities [12] - Despite recent trends favoring international stocks, analysts predict that U.S. equities will continue to outperform, with Goldman Sachs estimating a 7% advance for the S&P 500 over the next year [14]