Research summary
ETF industry trends: Balancing risk and opportunity
May 20, 2025
Vanguard research examines the risk of overconcentration in large-capitalization U.S. equities and whether ETF investors are adjusting the global allocation in their portfolios as a result. We also consider, in an uncertain rate environment, reasons to rethink allocations to Treasuries as the term premium returns.
Vanguard ETF Industry Perspectives Q2 2025 [11-page PDF] is our in-depth quarterly commentary featuring the latest ETF trends and insights. In each report, our investment experts help investors address issues that may affect their portfolios.
Key takeaways
Equity spotlight
Surging U.S. stocks in recent years have made equity benchmarks including the Standard & Poor’s 500 Index top-heavy with tech giants, raising concerns about overconcentration and overvaluation. Advisors are already shifting portfolios more toward small- and mid-cap stocks, but addressing home bias by adding more international stocks could further diversify portfolios and mitigate these risks.
Fixed income spotlight
During the second half of 2024, the yield differential between 2-year and 10-year Treasury bonds turned positive, ending the longest period on record of yield-curve inversion. Despite ongoing economic uncertainty, the restoration of the Treasury term premium and higher yields suggest rethinking allocations to Treasuries, with longer-term bonds offering potential return and diversification benefits.
ETF Perspectives: Q2 2025
Notes:
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