2 Vanguard ETFs Outpacing the S&P 500 and Nasdaq-100 This Year but Facing Near-Term Tests
2026-10-07 09:30
•Todd Shriber •The Motley Fool
•••••• ••• Axe Cap view
Energy and Japan ETFs Outperform; Local Caution Advised
Vanguard’s energy and Pacific ETFs are up sharply in 2026 but face clear risks that matter for South African investors.
The Vanguard Energy ETF’s 42% gain this year underlines the current strength in oil prices. But local investors should be cautious. Sasol, South Africa’s largest energy-related stock, is closely tied to oil prices and remains vulnerable if geopolitical tensions ease or global demand falters. On the other side, the Vanguard Pacific ETF’s heavy Japan exposure faces headwinds from rising interest rates that could strengthen the yen and pressure exporters. While these moves reflect broader global themes, the rand’s performance versus the dollar will also influence returns for South Africans investing in these areas. A stronger rand can mute gains from international assets, especially in the energy sector due to dollar-denominated oil prices. Given these points, sitting tight on these ETFs makes sense for now. This view could be wrong if geopolitical risk unexpectedly spikes, driving oil prices and Sasol higher. this is just our opinion and not financial advice
Avoid buying the Vanguard Energy or Pacific ETFs directly for now; instead, consider watching Sasol for tactical entries if oil rises or Rand weakens. Keep an eye on USD/ZAR movements as a key hedge and timing tool.
- Sasol
- USD/ZAR
- Oil price collapse if Iran tensions ease
- Yen strength hurting exporters and impacting rand returns
6/10
The Vanguard Energy ETF (VDE) and Vanguard FTSE Pacific ETF (VPL) are significantly outperforming the S&P 500 and Nasdaq-100 in 2026, with gains of 42.3% and 30.7% respectively. However, both face near-term headwinds: VDE is vulnerable to oil price volatility tied to geopolitical tensions, while VPL's heavy Japan exposure (54.5%) faces risks from rising interest rates that could strengthen the yen and hurt exporters.
Our take is based on reporting first published by The Motley Fool.