The Best Vanguard ETF to Invest $1,000 in This April
Key Points
The markets have rotated away from tech but have created opportunities for outperformance elsewhere.
The energy sector has been the biggest winner of the year thus far, but the rally may not be over yet.
The Vanguard Energy ETF, which provides exposure to the industry's biggest U.S. names, still offers value.
- 10 stocks we like better than Vanguard World Fund - Vanguard Energy ETF ›
After three consecutive years of double-digit returns, the U.S. stock market has turned choppy in 2026. The Iran war has spiked volatility, and the S&P 500 has been on a roller-coaster ride all year.
Not every area of the market, however, has done poorly. Defensive and value stocks have taken over leadership of the market and have produced solidly positive returns. But the clear winner this year has been the energy sector. The Vanguard Energy ETF (NYSEMKT: VDE) is up about 30% year to date, making it the best-performing fund in Vanguard's entire ETF lineup.
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While it could easily be assumed that the biggest gains have already been had, here's why I think this fund still deserves a look in April if you have cash you want to put to work.
Source: Getty Images.
Key takeaways
- VDE is up 30% year-to-date, compared to a 1% decline for the Vanguard S&P 500 ETF.
- The fund holds more than 100 U.S. stocks, but ExxonMobil and Chevron alone account for more than 35% of the portfolio.
- With a price-to-earnings (P/E) ratio of 20 and a yield of 2.3%, it still represents a good value and income option for investors.
- Continued escalation in the Middle East could drive crude oil and energy stock prices up even farther.
Energy is the biggest story of 2026
The narrative for the energy sector was positive even before the Iran war. Steady demand was met with controlled supplies, helping to keep a floor under prices. Manufacturing was making a rebound. But the conflict in the Middle East turned modest supply into a global supply shock. That has sent crude prices soaring with energy stocks also getting pulled higher in the process.
The big wild card right now is that we don't know how long this will continue. Although the recent ceasefire may allow energy and cargo shipments through the Strait of Hormuz, great uncertainty remains. The longer the war continues, the longer it's likely to pressure prices higher. In other words, the near-term catalysts for energy stocks are:
- Elevated oil prices from Middle East supply shock
- Steady demand despite higher prices
- Valuations that are still attractive
What you actually own when you buy VDE
| Metric | VDE | VOO |
|---|---|---|
| 2026 YTD return | +35% | -4% |
| Expense ratio | 0.09% | 0.03% |
| P/E ratio | 20.2 | 27.6 |
| Dividend yield | 2.3% | 1.2% |
| Number of holdings | 100+ | About 500 |
| Sector focus | U.S. energy | Broad U.S. market |
| Top two holdings | XOM, CVX (37%) | NVDA, AAPL (14%) |
Source: Vanguard Group.
Because the performance of energy stocks has been heavily driven by geopolitical events, there's the risk that sector performance could turn lower again should there be a resolution in the Middle East.
While short-term events may be supportive for energy stocks, long-term investors may want to consider the broader macro picture first. Energy demand from the current uptick in manufacturing activity and the AI buildout remain bullish catalysts, although investors should expect some volatility along the way.
The Vanguard Energy ETF remains one of the better ways to invest in this sector. Investors should, however, monitor their holdings should conditions change quickly.
Should you buy stock in Vanguard World Fund - Vanguard Energy ETF right now?
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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