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Your day-ahead look for March 18, 2026

The last time Vanguard made a change to the investment strategy of its flagship target-date series, Barack Obama was in his final term as president. In the decade since, the landscape has exploded. Over 150 new series have launched, both as mutual funds and collective investment trusts, each promising a differentiated and better approach. Competitors have been busy refining their strategies, often increasing exposure to stocks for younger investors, mixing low-cost index funds with active funds, and making more surgical portfolio decisions than Vanguard’s straightforward approach of using four broad index funds. Despite the increased competition and the many refinements, Vanguard Target Retirement’s performance has remained consistently above average, and the series’ position as the most widely used target-date series has only strengthened in the past decade. The Vanguard Target Retirement series had approximately $1.8 trillion in assets between its mutual funds and CITs at the end of 2025. That’s 37.5% of the more than $4.8 trillion in overall target-date assets, according to Morningstar’s 2026 Target-Date Landscape Report. At the end of 2015, Vanguard’s share of the market was 29%. In this article, we look at the factors that have contributed to the Vanguard Target Retirement series’ continued role as the most popular option for retirement savings, and those that haven’t. We also look at how peers are competing by moving beyond traditional stock and bond portfolios to include options like guaranteed income and private markets, and why, despite the attention those innovations will attract, they are unlikely to dethrone Vanguard.Vanguard’s Straightforward ApproachVanguard Target Retirement follows a deliberately simple philosophy of providing efficient exposure to global markets through just four low-cost index funds. The series avoids tactical shifts; a committee of senior, long-term-focused investors makes sparing adjustments to the glide path or asset allocation.The last meaningful change occurred in 2015, when the team increased international exposure by 10 percentage points. This set the strategic split at 60% US/40% non-US for equities and 70% US/30% non-US for bonds. While this underweighting in US markets acted as a headwind for much of the past decade, the decision has aged better since early 2025 as international stocks began to outperform.This restraint is intentional. A decade ago, Vanguard’s 90% equity allocation for younger investors (ages 25–45) matched the industry average. However, as a prolonged bull market led competitors to drift toward a 93% average allocation, Vanguard held the line. The firm maintains that its glide path is designed for a moderately conservative profile, one it believes best represents the typical retirement saver.Consistent, If Not Spectacular, ResultsGiven Vanguard’s surging market share, it is tempting to assume that top-tier performance was the primary driver. In the target-date world, however, performance chasing is less pronounced than in other asset classes.The exhibit below illustrates this by showing the average five-year performance rank for the five largest target-date series (using their cheapest share classes as of 2015). Because plan sponsors typically review their lineups on five-year cycles, these rolling rankings reveal how performance influenced investor behavior.Over the past decade, Vanguard Target Retirement’s average category rank never reached the top quartile in any rolling five-year period. This is partly due to its conservative glide path and its US stock underweighting during a period of domestic dominance. Despite lacking spectacular short-term wins, the series has consistently outpaced the average peer, offering the steady, reliable experience that many fiduciaries prize over high-octane returns.The Narrowing Cost AdvantageVanguard’s dedication to low costs is legendary, but in the 401(k) arena, competitors have slashed fees and dulled that edge. The pressure isn’t just coming from the plan sponsors; it’s coming from the courtroom. In 2025, the number of excessive fee lawsuits jumped to 74 from 43 in 2024, according to Encore Fiduciary, a fiduciary liability insurance company. This litigious environment has turned low fees into a commodity. While Vanguard Target Retirement’s mutual fund price of 0.08% ($8 for every $10,000 invested) remains low, it is no longer the market floor. That distinction belongs to Fidelity Freedom Index’s Institutional Premium II share class, which charges just 0.04%.As competitors price their series at or below Vanguard’s level, driving the median target-date fund fee down, Vanguard’s edge has shifted from a massive lead to a narrow margin.As more money in 401(k) plans shifts to CITs, the fee competition is only getting tougher. Vanguard Target Retirement’s CITs, which now hold the majority of the series’ assets, start at 0.075% and can go as low as about 0.03% for the largest plans. But peers’ fees can go just as low, if not lower. The ‘Good Enough’ PortfolioIf performance and fees alone don’t explain Vanguard’s widening lead, what does? The answer lies in the incentives of the plan sponsors and consultants who serve as fiduciaries.For these decision-makers, there is no performance bonus for picking a top-quartile series. Instead, their primary motivation is risk mitigation, selecting a lineup that won’t rock the boat or trigger a lawsuit. In this context, Vanguard’s massive brand recognition among employees is an invaluable shield. Its no-frills approach and straightforward portfolio construction make it a defensible, easy-to-explain option that rarely draws scrutiny.Complexity as a Barrier to EntryLooking ahead, the target-date industry is moving toward new frontiers like guaranteed income and private markets. While these innovations offer potential benefits, they also bring added complexity and unique downside risks. For a plan sponsor, the hurdle for adoption is high; the marginal gain of a more sophisticated portfolio may not outweigh the fiduciary risk of moving away from a simpler, proven model. Ultimately, as we have noted before, even the most innovative investment portfolios cannot act as a panacea for poor saving habits.

Almost everything except for bonds – stocks, interest rates, credit, gold and the U.S. dollar – is having “very normal white swan types of moves.”

Check out two left-handed pitchers from the National League (NL) who have tantalizing odds and compelling cases to win the NL Cy Young Award in 2026.

The Philadelphia Phillies starter attempted to clear the air after he was “painted as a traitor” by fans.

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BTC consolidated with subdued volatility, while derivatives positioning and macro uncertainty signaled cautious market sentiment.

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Courtesy of Amazon

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Exchange-traded funds have transformed investing. Thirty years ago, they started as a simple and tax-efficient way to access broad market indexes. However, the latest ETF launches have gotten more specialized, less diverse, and more expensive. The number of ETF launches set a new high in 2025, with over 1,000 new ETFs entering the fray.The growing number of these niche ETFs has revealed a troubling pattern. Rather than solving real problems, many new ETFs hitch themselves to mainstream narratives. This usually occurs after the underlying stocks have already enjoyed a substantial boom in short-term performance. The creators of these ETFs are essentially just responding to demand from those chasing short-term returns. The irony is that these ETFs typically hit the market at or near a narrative’s peak, when valuations are stretched and expected returns are less optimistic.The result is that investors end up holding speculative portfolios with high fees. Such ETFs do little more than amplify fanfare in their underlying themes, and they can contribute to small-scale bubbles that ultimately unwind to the detriment of those holding shares.Why the Hype?Asset managers operate in a competitive business where success depends on attracting investors’ attention and money. As a result, they tend to respond to themes that have already captured public imagination and generated strong recent returns. Historically, similar ETF launches have clustered around periods when specific themes performed well, and it was accompanied by a compelling narrative, often about how the theme would “change the future.” Most recently, environmental, social, and governance-focused ETFs went through that phase in 2021, and ETFs tied to artificial intelligence and cryptocurrencies followed in 2025. Rather than being driven by sound investing principles, most of these launches were timed to capitalize on enthusiasm. Social media amplifies these trends by highlighting eye-catching returns, while social sentiment spreads optimistic narratives. ETF creators are clever, and they’re quick to recognize a receptive audience. They build new strategies and market them as timely opportunities to participate in the latest and greatest investment fads. This creates a cycle in which supply follows hype, but the opportunity to invest comes only after prices have neared a peak and valuations are stretched. The Performance Problem Because many thematic ETFs debut near a peak, they often face a difficult future from day one. Years of research across multiple market cycles show that thematic ETFs tend to lag the broader global stock market after launch, largely because they’re expensive and their valuations at the time of introduction are already inflated by previous performance. The pattern can be observed in several recent periods. In 2021, 38 new ESG-focused ETFs launched following a very bullish 2020. As of February 2026, only 21 of those 38 remain. In this case, the high closure rate could be attributable to inconsistent or underwhelming performance, an inability to attract new investors, or both. In 2025, 70 new ETFs were launched with a focus on digital assets and cryptocurrency. Some of these new ETFs simply track the price movement of cryptocurrencies like bitcoin, solana, XRP, ethereum, or dogecoin. Other ETFs within this group take already-volatile cryptocurrencies and add on a layer of leverage or an option that manipulates their risk/reward trade-offs. These launches followed a couple of great years for cryptocurrencies. Bitcoin surged approximately 150% in 2023 and 125% in 2024. Unfortunately, investors in these newly launched ETFs did not experience a repeat of those spectacular returns. The price of bitcoin peaked in October 2025 and has since dropped almost 50%. Investors who watched years of amazing performance from the sidelines and gave in to the optimistic marketing found themselves sitting on early losses, while diversified benchmarks continued to compound steadily. Over longer horizons, the combination of poor timing, volatility, high fees, and lack of diversification often leads to poor performance relative to broad market ETFs. Concentration and Limited Diversification While thematic ETFs may appear diversified on the surface, they are generally far more concentrated than investors expect. Most emerging or narrative-driven thematic ETFs include only a handful of stocks compared with broad-market indexes that have anywhere from 500 to over 5,000 holdings. Of the 1,117 ETFs that launched in 2025, only 182 of them had more than 100 holdings. This means approximately 84% of the new ETFs that launched are considerably more concentrated than many investors realize. What’s worse, almost 46% of the 1,117 ETFs that launched in 2025 had fewer than 10 holdings. Concentrated portfolios magnify the impact of stock-specific risk and cause fund returns to depend disproportionately on a small group of volatile stocks. Conversely, thematic ETFs that have many holdings may have achieved diversification by including stocks that are barely related to the concept marketed to investors. For example, should an AI-centered ETF include companies building AI models, companies producing the hardware that makes AI possible, companies implementing AI into daily workflows, or companies attempting to compete in the space that have been unsuccessful thus far? How far should a theme stretch? At a certain point, the concept broadens out too much, and the ETF doesn’t really provide the targeted exposure that it claims. Higher Fees and Mini-Bubbles Fees have also started to move in the wrong direction. The average ETF that launched in 2025 came with a higher expense ratio than an established ETF. Furthermore, there is little evidence suggesting that the added cost reflected a benefit to the end investor. Many of these ETFs promised access to “new opportunities” or “next-generation ideas.” But their underlying methodologies were frequently simple rules or repackaged approaches that differed only marginally from existing, lower-cost options. In this sense, higher fees were less about improving the quality of the investment and more about a novel or narrow approach to an existing concept. Increasing expense ratios are largely attributable to the rise of actively managed ETFs. Of the 1,117 ETFs launched in 2025, 943 are not tracking an index and would be considered actively managed. The equal weighted average expense ratio of this group weighed in at an astounding 76 basis points. The common link between these recent launches appears to confirm the worst: high fees, low diversification, and unwarranted complexity. When the enthusiasm behind these overhyped products fades, the unwinding can be swift and punishing. Inflated valuations begin to normalize, leading to sharp drawdowns in the underlying stocks. ETFs built on small, speculative names can fuel those price declines when fear and selling pressure rise. This often coincides with a wave of ETF closures, as those that once attracted investors during the hype struggle to remain economically viable after performance falters. Investors, attached to previous prices, may hold on to losing positions in the hope of a rebound that never comes. Recency bias leads them to expect a return of the strong gains that first sparked interest in the strategy while searching for fundamentals that were never present. In the end, many investors find themselves with losses that could have been avoided had they focused on sound principles rather than chasing returns. Ironically, trying to get rich quickly is often the slowest way to get rich.What Investors Should Do Instead First, realize that narrative-driven cycles are nothing new. Markets have been here before, and they’ve continued to survive and thrive over the long run. The keys to long-term success haven’t changed. Diversification remains the first line of defense. Good ETFs diversify sufficiently to reduce stock-specific risks that are inherent in narrow themes. Fees deserve close attention as well. Higher expense ratios demand superior performance to make the expense worth it. Thematic ETFs have a poor track record, and most fail to outperform the global market. A healthy dose of skepticism is warranted when themes dominate headlines. Trends that dominate the media and then emerge as the target of a new ETF often signal that the narrative has already been fully priced into the market. The rapid growth of ETFs has unquestionably expanded the choices available to investors. However, many of the newest ETFs do not necessarily serve investors well. As the 2025 launch cycle illustrates, new ETFs have shifted from broad, low-cost diversification toward increasingly narrow, speculative, and high-cost strategies. They can reinforce market enthusiasm, drive short-term bubbles, and leave investors holding concentrated, poorly timed positions that struggle to keep pace with more broadly diversified ETFs. ETFs themselves are not flawed. Rather, their expanding universe requires more scrutiny than ever. Investors must look beyond the ETF label and evaluate what they are truly buying. They must consider the number of holdings, the economic rationale behind the fluff, fees relative to alternatives, and whether recent performance reflects enduring fundamentals or temporary excitement. The idea is to avoid the pitfalls of narrative-driven ETFs and remain focused on strategies with a durable foundation. ETFs remain powerful tools when used with the same care and discipline that defined their early success. In a market environment where innovation is abundant and hype travels quickly, thoughtful decision-making is still the most reliable safeguard.

Zachary Evens: Small-cap stocks have spent the last few years in the market’s shadow, but 2026 could shape up to be a different story. With interest rates falling, economic growth broadening, and valuations for smaller companies still sitting at attractive levels, investors are starting to rediscover the appeal of small-cap stocks. While small-cap indexes have lagged large-cap indexes for a long time, they’ve actually outperformed in the last six months, and Morningstar’s 2026 Outlook suggests that trend might continue. That doesn’t mean investors should blindly buy any small-cap ETF. There are several risks unique to small caps, and the best long-term ETFs keep costs low, diversify across hundreds of holdings, and follow disciplined, repeatable strategies. The three ETFs highlighted here check all those boxes. They offer broad exposure to small companies, each with its own unique angle, and all with fees that won’t drag down returns.For investors looking to position their portfolios for a potential small-cap revival, these three great ETFs deserve a close look.3 ETFs for a Small-Cap RevivalVanguard Small-Cap Index Fund ETF Shares VBAvantis US Small Cap Equity ETF AVSCSchwab International Small-Cap Equity ETF SCHCFirst up is Vanguard’s Small-Cap Index ETF, which trades under the ticker VB. It charges just 5 basis points annually and sits in the small-blend category. It is one of the most cost-effective ways to gain exposure to small US companies and earns a Gold Morningstar Medalist Rating.This ETF tracks the CRSP US Small Cap Index, which is a broad benchmark that spans more than 1,300 companies and includes slightly larger stocks than some peers. That breadth is a major advantage, and its slightly larger orientation also controls risk. No single company or industry dominates the portfolio, and the fund captures the full spectrum of small-cap opportunities.Its market-cap-weighted approach keeps turnover low and ensures the fund naturally tilts toward the best performing stocks and sectors. For investors who want a simple, reliable, and extremely diversified way to participate in a small-cap rebound, VB is a standout option. Next up is Avantis US Small Cap Equity ETF, ticker AVSC. It charges 25 basis points annually and sits in the small-value category. Avantis has built a strong reputation for blending academic research with practical portfolio construction, and this ETF is a great example of that philosophy. Instead of simply tracking an index, AVSC uses a rules-based approach that emphasizes companies with strong profitability and attractive valuations. This gives the fund a subtle but meaningful tilt toward higher-quality small caps. In a volatile segment, this is an important distinction that supports a Morningstar Medalist Rating of Silver.The portfolio holds several hundred stocks, which keeps concentration risk low. Its factor-driven strategy aims to capture the historical outperformance of the value and profitability factors, while still maintaining broad diversification. For investors who want a more intentional, factor-based approach to small-cap investing, AVSC is a great choice.Last but not least is Schwab International Small-Cap Equity ETF, ticker SCHC. It charges just 8 basis points annually and also earns a Silver Morningstar Medalist Rating. Small-cap strength isn’t just a US story. International small-cap valuations also look attractive, potentially making this ETF a sound complement to a domestic small-cap allocation.SCHC tracks the FTSE Developed Small Cap ex US Index, giving investors exposure to more than 2,000 companies across Europe, Asia, and other developed markets. Broad diversification also helps smooth out the volatility that can come with investing overseas.International small caps tend to be more closely tied to local economic conditions, so when global growth accelerates, this segment can deliver strong performance. SCHC offers a simple way to tap into that potential. A small-cap revival won’t happen overnight, but if and when it does, any of these three ETFs offer a low-cost path to capturing that next wave of small-cap growth.Read: Why Investors Shouldn’t Ignore Global Small-Cap StocksWatch 3 Great International ETFs for 2026 and Beyond for more from Zachary Evens.