With less than two months left in 2025, it's safe to say this will go down as another year in which growth stocks sharply outperformed value counterparts. Those are the breaks when investors are fawning over glamour names, including the "Magnificent Seven."
Here's the tale of the tape. An investor who bought a basic value fund, say one tracking the S&P 500 Value Index, at the start of the year might be satisfied with the roughly 11% returns generated by that fund. That satisfaction is likely to evaporate upon learning that a plain-vanilla fund tracking the S&P 500 Growth index is up more than 24% year to date.
That growth/value chasm underscores the importance of being choosy regarding direct allocations to specific value sectors. Fortunately, the Vanguard Financials ETF (VFH 0.02%) indulges that selectivity, and it could be a solid idea for cash-constrained investors looking to diversify their growth-heavy portfolios.
This Vanguard sector ETF is great for cash-conscious investors and provides some Warren Buffett exposure, too. Image source: Getty Images.
Possible Berkshire rebound makes me like this Vanguard ETF
For what it lacks in exposure to story stocks, this financial services ETF makes up for it with a portfolio chock-full of familiar names, including Warren Buffett's Berkshire Hathaway. In fact, the Vanguard ETF's nearly 8% weight to Buffett's conglomerate is one of the reasons I like this fund.
Indeed, the stock has been a drag on the ETF this year, returning a mere 7.2% amid concerns about the company's rising cash stockpile and lack of share repurchases. At the end of the third quarter, Berkshire held a staggering $381 billion in cash, and that period marked the 12th straight quarter in which the company was a net seller of stocks.
NYSE: BRK.B
Key Data Points
Many market participants view Berkshire's hoarding of cash as Buffett saying there's no value to be had in stocks or, worse, he's battening down the hatches in preparation for a bear market. There are other perspectives to consider regarding Berkshire's cash is king posture. Notably, Buffett retires at the end of this year with Greg Abel officially taking the helm at the start of 2026, so it's possible that some dry powder is being set aside for when Abel is running the Berkshire show.
Berkshire's tepid year-to-date showing may also be attributable to investors focusing more on the cash position than the company's execution. For example, operating profit jumped 33% in the September quarter.
But if cash is what an investor insists on emphasizing, it's worth noting that after Berkshire, three of the four most cash-rich U.S. companies are Amazon, American Express, and Apple. All three of those stocks are Berkshire holdings with the latter two ranking among the conglomerate's top five positions. And, by the way, American Express is a top-10 holding in the Vanguard ETF we're discussing.
NYSEMKT: VFH
Key Data Points
Improving the shareholder rewards story with this Vanguard ETF
Beyond its status as a pseudo-Berkshire proxy, this Vanguard sector ETF sports other favorable traits, including rising shareholder rewards among major U.S. banks. Following the Federal Reserve's latest stress-test results, a slew of big-name banks, including marquee holdings in this fund, got the green light to boost dividend payments and expand share repurchase programs.
That's great news for long-term investors mulling this Vanguard ETF because, as a value sector, financial services requires some patience before sizable gains accrue. Dividends, particularly when steadily rising, can make it easier for investors to stay engaged for extended time frames.
As just one example, JPMorgan Chase, the largest holding in the Vanguard fund, in July announced a quarterly dividend increase of 10 cents to $1.50 a share and a new $50 billion share repurchase program. Plus, the Vanguard ETF's dividend yield is just 1.50%, which isn't demanding, implying room for long-term payout growth.