The bull market is still running, but this isn’t the bull market of the past few years.
Yes, 500 Index (VFIAX) gained 10.2% in the first half of the year—on pace for its third 20%-plus calendar year in the past four. And Information Technology ETF (VGT) remains Vanguard’s best-performing sector fund, up 27.1%. That sounds like the same bull market we’ve grown used to.
Look closer, though, and the cycle has shifted. The so-called Magnificent Seven—Apple, Amazon, Alphabet, Meta, Microsoft, NVIDIA and Tesla—drove the market higher in past years. This year, the Roundhill Magnificent Seven ETF (MAGS) is down 2.5%. Tech's gains this year are coming from a broader set of winners—not just the usual suspects.
With the old leadership stumbling, other corners of the market have stepped up:
- SmallCap Index (VSMAX): 18.2%
- Total International Stock Index (VTIAX): 14.0%
- Real Estate Index (VGSLX): 11.1%
Another sign the market has entered a new phase: Value Index (VVIAX) is beating Growth Index (VIGAX), 15.3% to 6.4%, this year.
500 Index has delivered solid returns. But diversifying away from the flagship index fund has paid off even more.
Turning to bonds, Total Bond Market Index (VBTLX) has delivered a reasonable 0.8% return. Once again, looking beyond the flagship fund has paid off: foreign bonds, measured by Total International Bond Index (VTABX), have done a bit better, up 1.2%. And playing it safe with cash has been even more rewarding—Federal Money Market is up 1.8%.
Put it together, and the average Vanguard investor has gained 9.2% this year—a solid step forward, though four of the five IVA Portfolios have done even better (and the Conservative Portfolio isn’t far behind).
None of this changes my core view: the AI trade is real, and I have no interest in sitting it out entirely. But the first half of 2026 is a reminder of why a diversified portfolio beats a concentrated bet. Leadership can rotate quickly, and you don't want to be left holding only last year's winners.
With that backdrop, let's turn to what Vanguard itself was up to in June—and there was plenty of it.
Vanguard and T. Rowe?
In an unlikely marriage of competitors, following its divorce from two longstanding outside subadvisors, Vanguard has added T. Rowe Price as a companion portfolio manager on three existing portfolios: Explorer (VEXPX), Small Company Growth Annuity and Growth & Income (VQNPX).