For many investors, the U.S. stock market’s performance in 2026 has been a puzzle. As of the close on Feb. 17, the S&P 500 was flat for the year. At first glance, it might appear that equities are going nowhere. But that couldn’t be further from the truth.
Beneath the surface, a powerful undercurrent is flowing. Mega-cap growth stocks have been retreating, while sectors like consumer staples, energy, industrials, and materials—areas that carry relatively little weight in the S&P 500—are quietly moving higher. In fact, if you weight each component in the S&P 500 equally rather than by market capitalization, the index is actually up 5.5% year to date. The message is clear: the market’s leaders are shifting, and the torch is being passed from growth to value.
Against this backdrop, three value-focused Vanguard ETFs have emerged as standout performers. Not only have they significantly outpaced the S&P 500, but they have also climbed to new highs for the year, making them the new darlings of smart money.
With a staggering $227 billion in net assets, the Vanguard Value ETF (VTV) is the largest value-focused ETF in the world—more than four times the size of the iShares S&P 500 Value ETF. Its massive scale allows Vanguard to charge a rock-bottom expense ratio of just 0.03%, or $3 for every $10,000 invested.
Unlike the Nasdaq Composite or the S&P 500, VTV’s top holdings are not tech giants like Nvidia or Apple. Instead, the fund is heavily concentrated in financials, industrials, and healthcare, which together account for 53.1% of its portfolio. Its top holdings include financial behemoths JPMorgan Chase and Berkshire Hathaway, oil and gas giant ExxonMobil, healthcare leader Johnson & Johnson, and recent addition to the $1 trillion market cap club, Walmart. These companies may lack the glitz and glamour of high-flying AI growth stocks, but they have long track records of rewarding patient shareholders with steady returns and consistently growing dividends.
VTV currently offers a dividend yield of approximately 2%, well above the S&P 500’s 1.2%. While the ETF’s recent price appreciation has nudged its valuation higher, it still trades at a discount to the broader market, with a price-to-earnings (P/E) ratio of 21.7—significantly below the Vanguard S&P 500 ETF’s 27.5.
The Vanguard Mega Cap Value ETF (MGV) can be thought of as a more concentrated version of VTV. It holds 123 stocks (compared to VTV’s 312) and carries a slightly higher expense ratio of 0.05%. The two funds have very similar holdings, but MGV assigns greater weight to the largest names. For instance, its top five holdings—JPMorgan Chase, Berkshire Hathaway, ExxonMobil, Johnson & Johnson, and Walmart—make up 16.1% of the portfolio, compared to 13.1% for the same five stocks in VTV.
Over the past five years, MGV has delivered a total return of 89.1%, edging out VTV’s 85.5%. For investors seeking concentrated exposure to industry-leading value stocks without excessive diversification, MGV is the superior choice.
Among the three ETFs, the Vanguard High Dividend Yield ETF (VYM) has been the strongest performer so far in 2026, posting an 8.1% gain year to date as of Feb. 17. Like VTV and MGV, VYM focuses on high-dividend stocks, but it has a slightly higher allocation to lower-yielding sectors such as technology and consumer discretionary. This gives the fund a dividend yield of 2.3%, modestly above its peers.
What sets VYM apart is its approach to portfolio construction. Rather than mechanically selling stocks that have appreciated and seen their dividend yields shrink, the fund tends to hold onto industry leaders. A prime example is Broadcom. Once viewed as a traditional value stock, Broadcom’s AI-fueled surge has driven its share price higher and its dividend yield down to just 0.8%. Yet VYM keeps it as its top holding, with a 7% weight. This gives the fund a unique growth-stock “kicker” while still delivering reliable passive income. Walmart tells a similar story: 52 consecutive years of dividend increases, but a yield of only 0.7%—a testament to its strong stock performance.
For most investors, any of these three ETFs would be a solid choice. But if you want to fine-tune your exposure:
The market’s rotation is well underway. While the S&P 500 appears stagnant on the surface, these three value-oriented ETFs are quietly grinding higher, offering investors a compelling alternative in an era of shifting leadership.
