1 Vanguard ETF That Could Soar 27.1% Before the End of 2024, According to a Top Wall Street Analyst

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Wall Street doesn’t always get things right, so investors shouldn’t base their decisions solely on the predictions of any one analyst. But Tom Lee from Fundstrat Global Advisors is on a hot streak, with a series of very accurate calls over the last couple of years.

He predicted the S&P 500 (SNPINDEX: ^GSPC) would climb to 4,750 in 2023, while many other analysts had a negative outlook, and it ended the year at 4,769. Plus, three of his S&P 500 targets for 2024 have already been surpassed (5,200, 5,500, and 5,700), and the index is now less than 2% away from hitting his most recent target of 6,000.

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Lee also came into 2024 with a bullish target for the Russell 2000 index, which features approximately 2,000 of the smallest companies listed on American stock exchanges. He believed falling interest rates and the cheap valuations among small-cap stocks would carry the index to a 50% gain in 2024.

His prediction might have received another boost thanks to President-Elect Trump’s election win. The Russell 2000 soared 5.8% on Nov. 6 (the day after the election), trouncing the 2.5% gain in the S&P 500.

The Russell was up 18.9% year to date as of Nov. 6, so it will have to climb by another 27.1% in the next two months to hit Lee’s target. It might be a bridge too far, but the Vanguard Russell 2000 ETF (NASDAQ: VTWO) directly tracks the performance of the small-cap index, so it’s a simple way for investors to profit if Lee turns out to be right.

Image source: Getty Images.

There are 11 different sectors of the U.S. economy represented in both the S&P 500 and the Russell 2000. However, the technology sector accounts for almost one-third of the S&P 500, so a mere handful of stocks can heavily influence the performance of the entire index.

The Russell 2000 is far more balanced. The industrials sector is its largest with a weighting of 18.9%, followed by the healthcare sector at 17.4%, and financial sector at 17.2%.

Moreover, the top 10 holdings in the Vanguard Russell 2000 ETF account for just 3.64% of the total value of its entire portfolio.

Stock

Vanguard ETF Portfolio Weighting

1. Vaxcyte

0.50%

2. FTAI Aviation

0.50%

3. Insmed

0.42%

4. Sprouts Farmers Market

0.41%

5. Fabrinet

0.32%

6. Applied Industrial Technologies

0.31%

7. Mueller Industries

0.30%

8. Fluor Corp

0.30%

9. Ensign Group

0.29%

10. UFP Industries

0.29%

Data source: Vanguard. Portfolio weightings are accurate as of Sept. 30, 2024, and are subject to change. Table by author.

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