Three Resilient Exchange-Traded Funds (ETFs) to Invest in Despite a Potential Stock Market Dive in 2025

Three Resilient Exchange-Traded Funds (ETFs) to Invest in Despite a Potential Stock Market Dive in 2025

As major stock market indices hover close to record highs in 2025, some investors might fear a potential market crash is imminent. The market's valuation, with prices surpassing earnings growth, has indeed been on the pricey side.

Valuation concerns could potentially cause stock prices to dip in 2025, but that doesn't necessarily mean investors should get rid of their holdings or halt their investment activities. Instead, it's crucial to invest in durable companies that keep demonstrating earnings growth, rather than chasing after trendy stocks for quick profits.

Exchange-traded funds (ETFs) come highly recommended for diversified investment in the market. Vanguard, a renowned investment management firm, offers a selection of affordable ETFs that cater to various themes and market sectors. Among these, the Vanguard Dividend Appreciation ETF (VIG), Vanguard Communications ETF (VOX), and the Vanguard S&P 500 ETF (VOO) distinguish themselves as solid investment options now.

Increase your passive income via dividend-growing enterprises

The Vanguard Dividend Appreciation ETF is committed to companies that showcase strong potential in increasing their dividends for years on end. Top investments featuring in this ETF include tech giants like Apple and Microsoft, along with finance companies such as JPMorgan Chase. Apple and Microsoft might have low dividend yields, but with a history of dividend increases and share buybacks in their repertoire, they remain appealing choices.

The ETF focuses on firms with robust earnings growth, making it an ideal option for investors eager to prioritize quality over high-yield stocks in the discount bin. Despite several top holdings hitting all-time highs and boasting inflated valuations, the well-diversified ETF has only 30.7% of its assets invested in its top 10 holdings, with none holding more than 5%. The Vanguard Dividend Appreciation ETF provides a lucrative 1.7% yield, surpassing the 1.2% yield offered by the S&P 500.

The communications sector unveils a unique synergy of growth and value

The Vanguard Communications ETF mimics the performance of the communications industry. In 2025, this robust ETF has been amongst Vanguard's top-performing funds, with an annual return of over 35%. Despite its extraordinary performance, the ETF is still considered an excellent deal due to the impressive earnings and cash flow growth exhibited by many top communications firms.

Key players like Meta Platforms, Alphabet, and Netflix–often recognized as tech companies–fall under the communications sector and dominate the Vanguard Communications ETF with a combined weight of 52.4%. The ETF's index also includes media giants like Walt Disney and Comcast, as well as telecom companies like Verizon Communications, T-Mobile, and AT&T. With almost 70% of the fund's assets invested in the top 10 holdings, its diversification level is limited, making it suitable solely for investors with conviction in these key stocks, especially Meta and Alphabet.

Despite trading at all-time highs, both Meta and Alphabet emerged as promising growth stocks in 2025, with relatively reasonable forward price-to-earnings (P/E) ratios in comparison to other significant growth stocks. However, investors should bear in mind that these companies could suffer financially during economic downturns due to their reliance on advertising revenue. Those who hold faith in the continuous growth of platforms like Google and YouTube (owned by Alphabet) or Instagram (owned by Meta) should consider investing in the Vanguard Communications ETF during volatile market phases.

An effortless solution for deploying your saved resources

The Vanguard S&P 500 ETF, with an impressive $1.37 trillion in assets under management, is among the most prominent S&P 500 index funds available. With an annual expense ratio of only 0.03%, this fund is as affordable as it gets, given that it costs $3 every $10,000 invested. In comparison, the Vanguard Communications ETF maintains an expense ratio of 0.1%, and the Vanguard Dividend Appreciation ETF charges 0.06%.

The Vanguard S&P 500 ETF mirrors the performance of the S&P 500, which has progressively become more capital-intensive as the largest companies have shown substantial growth, leaving smaller companies trailing behind. The top 10 firms in the S&P 500, including leaders like Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta Platforms, Tesla, Berkshire Hathaway, Broadcom, and JPMorgan Chase, make up a staggering 36.2% of the entire index.

Some investors might feel that there are more profitable ways to allocate funds than purchasing top growth stocks at record highs. Nevertheless, it's crucial to grasp that valuations can become reasonable if the underlying businesses sustain earnings growth over time. Generally speaking, today's high-performing stocks are boosting earnings and boast extended potential for future earnings amplification. While top growth stocks might appear overpriced at present and yield subpar yields in the near term, they ought to serve as outstanding long-term ventures.

As a result, individuals with incredibly prolonged investment horizons should still think about purchasing a S&P 500 index fund.

Three ETFs centered around cutting-edge enterprises

The Vanguard Appreciation ETF, Vanguard Communications ETF, and the Vanguard S&P 500 ETF are all presently hovering close to their all-time highs. Nonetheless, they could remain worthwhile purchases even in case of a market correction in 2025 due to their focus on industry pioneers and high-quality businesses.

Even the strongest companies might endure an earnings decline during an economic contraction. However, industry leaders benefit from numerous advantages during a downturn that enable them to snatch market share, purchase partners at reduced costs, or keep funding research and development while rivals struggle to stay afloat.

Nobody is aware of what the market will do in 2025, but investing in top-notch companies -- or ETFs that include such companies -- constitutes a blueprint for generating long-term wealth. Accordingly, despite substantial gains in recent times, long-term investors should still consider buying the Vanguard Appreciation ETF, Vanguard Communications ETF, and the Vanguard S&P 500 ETF, even if there is a market correction in 2025.

In light of valuation concerns and potential market fluctuations, it's wise for investors to focus on durable companies with strong earnings growth, such as those in the Vanguard Dividend Appreciation ETF, which features tech giants like Apple and Microsoft and finance companies like JPMorgan Chase.

Despite some top companies in Vanguard ETFs trading at all-time highs, these ETFs often provide diversification and potential for long-term growth due to their focus on high-quality businesses with extended potential for future earnings amplification.

Read also: