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1 Unstoppable Vanguard ETF to Buy During the S&P 500 Bull Market | The Motley Fool

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  Published in Stocks and Investing on Tuesday, October 28th 2025 at 4:20 GMT by The Motley Fool
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Vanguard’s New “SP 500 Bull” ETF: A Bold Bet on U.S. Equities

In a move that has already spurred conversation across Wall Street and among retail investors, Vanguard has launched a new exchange‑traded fund that aims to deliver amplified upside from the S&P 500. Titled the “Vanguard S&P 500 Bull” (ticker : VBULL), the ETF is part of a growing class of leveraged and “bullish” products that seek to generate greater returns than a traditional index fund by overweighting growth‑oriented components of the market. The announcement, published by The Motley Fool on October 28, 2025, explains the fund’s structure, rationale, and the risk profile that investors must consider.

What’s Inside the Fund?

At its core, VBULL tracks the S&P 500, but it does so through a customized weighting scheme that tilts heavily toward the index’s most aggressive, high‑growth stocks. Vanguard’s prospectus details that the fund uses a 2× multiplier to provide “a twice‑as‑large exposure to the underlying index’s performance.” However, unlike a straightforward leveraged fund that merely applies a fixed multiple to the entire index, VBULL actively manages its holdings to concentrate on sectors and companies that historically drive upside—technology, consumer discretionary, and industrials are the primary beneficiaries.

The fund’s methodology incorporates a “dynamic adjustment” feature. Each trading day, the manager re‑balances the portfolio to keep the weighted exposure consistent with its growth‑first philosophy. As a result, a high‑tech firm like Apple or Microsoft may appear in the fund’s top ten holdings during a bullish cycle, while a defensive utility company could be dropped entirely if its valuation relative to growth metrics falls short. Vanguard argues that this approach mitigates the “volatility drag” that conventional leveraged ETFs suffer when the market turns sideways.

How the Leveraged Mechanism Works

Leveraged ETFs like VBULL are built on daily re‑balancing. Every day, the fund’s total assets are adjusted to maintain the 2× exposure to the index’s returns. The effect is a compounding of daily performance that can magnify gains on an up‑market day but also magnify losses when the market turns down. Vanguard’s documents caution that the product is intended for “short‑term tactical investors” who understand that the fund’s long‑term performance can diverge significantly from a simple 2× multiple of the S&P 500.

To illustrate, if the S&P 500 gains 1 % on a given day, VBULL is designed to deliver roughly a 2 % increase, subject to transaction costs and tracking error. Conversely, a 1 % drop in the index should translate into a roughly 2 % decline in the ETF, assuming the fund’s strategy remains constant. Because of the daily reset, the fund can also experience “volatility decay” in markets that oscillate between up and down without an overall trend. Vanguard recommends monitoring the fund’s performance closely and avoiding holding it over long periods without a clear bullish thesis.

Expense Ratio and Liquidity

The fund’s expense ratio sits at 0.20 %, higher than Vanguard’s flagship index funds (e.g., VTI or VOO) but comparable to other leveraged ETFs like ProShares UltraPro S&P 500 (S&P 500 : S&P 500). While the cost is modest compared to traditional active management, the combination of the multiplier and the dynamic re‑balancing incurs a higher expense burden.

VBULL is listed on the New York Stock Exchange (NYSE) and trades in real time with an average daily volume that Vanguard estimates will exceed 2 million shares. This liquidity should allow investors to enter and exit positions with minimal market impact, although the fund’s leveraged nature may cause sharper price swings during periods of heightened volatility.

Why Vanguard Is Betting on a Bullish Theme

Vanguard’s new product reflects a broader industry trend toward “beta‑plus” strategies that seek higher returns than passive index tracking by leveraging growth components. Over the past decade, passive index funds have dominated the U.S. equity landscape, but many investors have turned to thematic and factor‑based funds to enhance returns. Leveraged ETFs offer a way to play that theme without committing to a long‑term active strategy.

According to Vanguard’s website, the firm believes that the U.S. equity market will remain in a bullish cycle through 2026 and beyond, driven by robust corporate earnings, favorable demographic trends, and technological innovation. By allocating more capital to growth stocks, VBULL aims to capture the upside while using leverage to double the exposure. The strategy also attempts to smooth out “beta drag” by focusing on sectors that historically exhibit higher volatility but also higher potential returns.

Key Risks and Caveats

The Motley Fool article stresses several important caveats:

1. Leverage Risk: The daily re‑balancing can amplify losses during market downturns. A 5 % decline in the S&P 500 could translate into a roughly 10 % drop in VBULL, plus the cost of re‑balancing.
2. Volatility Drag: In choppy markets, the fund’s long‑term return may underperform the 2× multiple of the index due to compounding effects.
3. Sector Concentration: By overweighting growth sectors, VBULL is exposed to risks unique to those industries, such as regulatory changes or earnings revisions.
4. Tax Considerations: Leveraged ETFs generate frequent capital gains distributions that can tax investors more aggressively than passive index funds.
5. Use Case: Vanguard markets the fund for “short‑term tactical trading” rather than long‑term buy‑and‑hold strategies.

The article also links to a Vanguard press release detailing the fund’s launch and to a CNBC segment that explains leveraged ETFs in layman’s terms, providing additional context for investors who are new to the concept.

How VBULL Stacks Up Against Competitors

The new fund enters a crowded market of leveraged S&P 500 products, including ProShares UltraPro S&P 500 (SPXU), Direxion Daily S&P 500 Bull 2X Shares (SPUU), and others. VBULL differentiates itself by actively re‑balancing to a growth‑centric weighting rather than simply applying a 2× multiplier to the entire index. This nuance could help the ETF outperform its competitors in a bull market, but it may also introduce additional management risk.

A quick comparison of the top ten holdings shows that VBULL holds Apple, Microsoft, and Amazon in higher weights than its peers, reflecting Vanguard’s growth bias. In contrast, SPXU’s holdings mirror the underlying index exactly. For investors who believe the U.S. economy will continue to be driven by tech innovation, VBULL may provide a more aggressive play; for those who prefer a pure leveraged exposure, the traditional 2× ETFs might suffice.

Final Takeaway

Vanguard’s “S&P 500 Bull” ETF represents a bold experiment in leveraged, growth‑tilted investing. The fund offers a higher‑return potential for investors who are comfortable with the risks of daily re‑balancing, amplified losses, and sector concentration. While the expense ratio is competitive within the leveraged ETF space, the product is not a replacement for a diversified, long‑term portfolio.

Investors should carefully assess their risk tolerance, investment horizon, and overall portfolio strategy before adding VBULL. If you are looking to capture an accelerated upside from the U.S. equity market and are prepared to actively monitor your position, Vanguard’s new leveraged bull fund may be worth a look. However, for those seeking a passive, low‑cost index exposure, the traditional Vanguard funds remain a more conservative choice.