NEW YORK, January 2, 2026, 05:38 ET
- U.S. equity funds drew about $16.9 billion in inflows in the week to Dec. 31, LSEG Lipper data showed.
- New investing commentaries highlighted Vanguard’s VOO and VGT as simple ways to stay exposed after 2025’s gains.
- Strategists say 2026 returns may depend on earnings growth broadening beyond megacap tech.
U.S. equity funds pulled in about $16.89 billion of net inflows in the week to Dec. 31 as investors ended 2025 on an optimistic note, according to LSEG Lipper data.
That momentum matters at the start of 2026 because U.S. stocks have already delivered three consecutive years of double-digit gains, leaving investors weighing how much exposure to keep in broad indexes versus technology-heavy trades. Low-cost exchange-traded funds, or ETFs, have become a default tool because they bundle many stocks into a single product that trades like a share.
The S&P 500 climbed more than 16% in 2025, and another strong year will likely require profit growth to spread beyond a small group of tech giants as valuations remain high. “Everything firing on all cylinders” would be needed for another year of strong double-digit returns, Sam Stovall, chief investment strategist at CFRA, said. Reuters
Retail investing sites have been leaning into that same choice in early-2026 coverage, with Vanguard’s products featuring prominently. Vanguard is one of the world’s biggest index-fund providers and its ETFs sit at the center of many passive portfolios.
In a Jan. 1 column, The Motley Fool contributor Katie Brockman argued that the Vanguard Information Technology ETF (VGT) has historically outperformed over longer periods and offers a broader tech basket than funds that tilt heavily to a single subsector such as semiconductors or artificial intelligence. Brockman wrote that VGT’s average annual return over the past decade was about 22%, implying a doubling of an initial investment in roughly 3.5 years at that pace.
VGT remains a concentrated bet. ETF Database data show the fund held about $114.3 billion in assets as of Dec. 31 and lists Nvidia, Apple and Microsoft as its three biggest positions, together accounting for more than 44% of assets.
The same data show VGT’s expense ratio — the annual fee taken from fund assets — at 0.09%, and its price-to-earnings ratio at about 39, a sign investors are paying up for expected growth. Technology Select Sector SPDR Fund (XLK), a major rival, is listed at a 0.08% expense ratio on ETF Database.
A different pitch landed late Thursday on Seeking Alpha, where contributor Eric Sprague framed Vanguard’s S&P 500 ETF (VOO) as a “forward-compatible” holding — a core position that adjusts over time as the S&P 500 adds and removes companies, rather than forcing investors to guess individual winners and losers in an AI-driven market. Sprague also flagged valuation risk, pointing to VOO’s high P/E and heavy exposure to AI-linked stocks, and cited a 1.12% dividend yield. Seeking Alpha
VOO is one of the largest and most widely used U.S. equity ETFs. ETF Database lists about $840.1 billion in assets for VOO as of Dec. 31, with an expense ratio of 0.03% and an annual dividend yield of about 1.13%.
The holdings show why some strategists worry about concentration even in broad index funds. ETF Database lists Nvidia, Apple and Microsoft as VOO’s top three positions, each above 6% of assets, and says the top 10 holdings make up about 39.6% of the fund.
VOO’s closest peers include the iShares Core S&P 500 ETF (IVV) and State Street’s SPDR S&P 500 ETF Trust (SPY). ETF Database lists IVV with a 0.03% expense ratio and SPY at 0.09%, with SPY also the most heavily traded among large-cap U.S. equity ETFs.
In a Dec. 28 column, 24/7 Wall St. contributor David Moadel pointed to that combination of low fees and high trading volume as a key reason broad index ETFs remain popular for long holding periods. Moadel also highlighted the bid-ask spread — the small gap between the price buyers pay and sellers receive — as a practical cost that tends to shrink in heavily traded funds.
The fee math is simple but material over time. A 0.03% expense ratio is roughly $3 a year on a $10,000 investment, while a higher-fee fund compounds that drag for as long as investors hold it.
For now, flows suggest investors are not rushing to the exits after 2025’s gains. Lipper data showed large-cap equity funds drew about $16.87 billion in inflows in the final week of the year, while smaller-cap equity funds saw net outflows.
