Navigating the Market: 3 Top Vanguard ETFs to Consider
As the broader stock market indexes hover around all-time highs, investors may be wondering if a correction is on the horizon. While valuation concerns are valid, it’s essential to focus on quality companies that can justify their valuations with earnings growth over time.
Diversification is Key
Exchange-traded funds (ETFs) offer an excellent way to invest in the market while maintaining diversification. Vanguard, a renowned investment management firm, offers several low-cost ETFs that target various themes and stock market sectors. Here are three standout ETFs that warrant consideration:
Vanguard Dividend Appreciation ETF (VIG)
This ETF focuses on companies well-positioned to continue raising their dividends for years to come. Top holdings include industry leaders like Apple, Broadcom, JPMorgan Chase, and Microsoft. While these companies may not offer high yields, they have a track record of raising dividends and repurchasing stock. The fund’s focus on earnings growth makes it an attractive choice for investors seeking quality over high-yield stocks at bargain prices.
Vanguard Communications ETF (VOX)
This ETF mirrors the performance of the communications sector, which has seen impressive growth year-to-date. Top holdings include Meta Platforms, Alphabet, and Netflix, which dominate the fund with a 52.4% combined weighting. While the fund’s heavy concentration in a few names means it’s not highly diversified, it’s still a great value for investors with high conviction in the top holdings.
Vanguard S&P 500 ETF (VOO)
With $1.37 trillion in net assets, this ETF is one of the largest S&P 500 index funds on the market. It sports an expense ratio of just 0.03%, making it an attractive option for investors seeking broad market exposure. The fund’s top 10 holdings, including Apple, Nvidia, Microsoft, and Alphabet, make up a significant 36.2% of the entire index. While some investors may be hesitant to invest in top growth stocks around all-time highs, it’s essential to remember that valuations can become reasonable over time if companies continue to grow earnings.
Investing for the Long Haul
All three ETFs are hovering around all-time highs, but they could still be worth buying even if there is a sell-off in 2025. By focusing on industry-leading, quality businesses, investors can build long-term wealth despite market fluctuations. Even the best companies can experience an earnings slowdown during an economic downturn, but leading companies have advantages that allow them to take market share, invest in research and development, and emerge stronger on the other side.
Don’t Miss Out on Quality Investments
Investing in quality companies or ETFs holding quality companies is a recipe for long-term success. Despite big gains in recent years, long-term investors should still consider buying the Vanguard Appreciation ETF, Vanguard Communications ETF, and the Vanguard S&P 500 ETF, even if there is a market sell-off in 2025.
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