Background

1 Vanguard ETF to Buy Now, 1 to Avoid

Article arrow_drop_down


One of the best innovations in investing has been the exchange-traded fund (ETF), an investment vehicle that lets anyone easily buy shares of a fund that holds a group of related stocks, often in an index.

Vanguard founder Jack Bogle is credited with creating one of the first index funds, a mutual fund that paved the way for the popular Vanguard 500 Fund, which tracks the S&P 500.

Today, Vanguard remains one of the most popular ETF managers and it offers investors dozens to choose from. Let’s take a look at one worth investing in and one to avoid right now.

The letters to "E.T.F." in a hole in a dollar bill.The letters to "E.T.F." in a hole in a dollar bill.

Image source: Getty Images.

One Vanguard ETF to buy now

The Vanguard ETF worth buying right now is the Vanguard Financials ETF (NYSEMKT: VFH), which tracks the MSCI US benchmark of large, mid-, and small-cap stocks in the financial sector.

Few ETFs are as cheap as the Vanguard Financials ETF today. The fund trades at a price-to-earnings (P/E) ratio of 16.6 right now, compared to 29 for the Vanguard 500 ETF, meaning the S&P 500 is about 60% more expensive right now.

Bank stocks tend to carry a low valuation even in a bull market because their growth is closely tied to the economy, and they’re cyclical, meaning they’re highly vulnerable to economic slowdowns or recessions.

Falling interest rates can create a headwind for banks because they tend to squeeze net interest margins, or the difference between interest earned on loans and other assets and the interest paid on deposits. But overall, lower rates should be a net positive because it encourages borrowing and economic growth, reigniting the investment banking market for initial public offerings and merger and acquisition deals. Meanwhile, a strengthening economy and falling rates will also lower the risk of credit losses, helping to boost profits.

The Vanguard Financials ETF is also much more than bank stocks. Its top 10 holdings include Warren Buffett’s Berkshire Hathaway, Visa, Mastercard, S&P Global, American Express, and Progressive.

The Federal Reserve looks on track to achieve the soft landing it’s been aiming for, meaning the economy could be set up for strong, steady growth over the next few years. That should favor financial stocks both as businesses and as perceived by investors, supporting multiple expansions. Meanwhile, falling rates could lead to a jump in demand for mortgages, auto loans, and other consumer financial products.

One Vanguard ETF to avoid

The Vanguard Financials ETF looks like a good buy because it trades at a discount to the S&P 500 and should benefit from economic tailwinds.

The Vanguard Consumer Staples ETF (NYSEMKT: VDC), on the other hand, looks expensive, and the economic conditions that have supported the sector are shifting.

Investors tend to favor consumer staples like Coca-Cola and Procter & Gamble in difficult economic times as consumers buy these kinds of products no matter what the economy is doing, effectively making them recession-proof. However, the flip side is that the upside potential is limited during economic expansions.

Currently, the Consumer Staples ETF trades at a price-to-earnings ratio of 25, making it only slightly cheaper than the S&P 500 ETF.

However, unlike the broad-market index, which holds fast-growing companies like Nvidia, the Consumer Staples ETF is made up of slower-growing companies like Procter & Gamble, Costco, and Walmart, which make up its top three holdings.

Those are great companies, but their valuations already look stretched. For example, P&G trades at a P/E ratio of 28; Costco is valued all the way up at 54, and Walmart trades at a P/E of 41.

Based on those valuations, investors are better off waiting for lower entry points for those stocks, which make up such a big component of the Consumer Staples ETF. Meanwhile, the Vanguard Financials ETF is the better choice here.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

American Express is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Costco Wholesale, Mastercard, Nvidia, Progressive, S&P Global, Vanguard S&P 500 ETF, Visa, and Walmart. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.

1 Vanguard ETF to Buy Now, 1 to Avoid was originally published by The Motley Fool



Source: finance.yahoo.com

About the author

trending_flat
Burglars ransack Southern California homes while posing as deliverymen

Residents are frightened and angry as a group of suspects continue ransacking San Fernando Valley homes, leaving a trail of destruction behind.A Valley Village resident said she was stunned and shaken up after thieves targeted her home on Dec. 17 between 5 p.m. to 6 p.m.The break-in was captured on home surveillance cameras as a male suspect approached the house and appeared to be disguised as a delivery man.“Ten minutes after we left [our home], someone was knocking at the door and our dog was barking away,” she said. “Then within a minute, someone had broken into the back of the house, smashed the glass door, came in and locked the dog in a room and just trashed the house. They took all of my jewelry.”Photos of the aftermath showed drawers in every room were removed and emptied and all […]

trending_flat
Jim’s owners retiring, leaving future of Mission diner unclear

The mom-and-pop owners of Jim’s Restaurant on Mission Street, a community staple for over three decades, will have their last day of work this Saturday, according to the restaurant.Jim’s Restaurant announced that its owners will be retiring after Saturday. It’s unclear, however, whether Jim’s will continue operating under new management. What is clear is it will no longer be the same without Ms. and Mr. Kim. The current owners, Kim Ok Un and Kim Jung Nyun, declined to comment about their retirement or whether Jim’s would continue operating.  An Instagram commenter says, “So so sooo happy for you guys!! So well deserved but Jim’s will never be the same without you”.Another says, “Legendary spot just up the street from KPOO. Thanks y’all for the decades of service to the community.”On Friday around noon, the restaurant at 2420 Mission St. between 20th and […]

trending_flat
Police bust man at Gwinnett McDonald’s they say tried to sell home he didn’t own

Gwinnett County police arrested a man at a local McDonald’s who they say attempted to sell a property he did not own by stealing the identity of its rightful owner.Police say 55-year-old Armond Long, of Lilburn, posed as the property owner and listed the land for sale on Zillow.The scheme unraveled when the actual owner discovered the listing while the sale was pending and contacted authorities.Records show the land was pending for $130,000 before law enforcement got involved.“He didn’t have any intention of selling that property, so he contacted local authorities,” said Cpl. Juan Madiedo.TRENDING STORIES: Authorities in Lake Havasu City, Arizona worked with Gwinnett County police to set up a sting operation.Long agreed to meet at a McDonald’s near the Mall of Georgia to sign final closing documents. An undercover Gwinnett officer, posing as a courier, handed Long documents […]

trending_flat
S.F. police shoot, kill Dior guard turned alleged hit-and-run driver

San Francisco police shot and killed a purportedly armed man they say they tracked down — after he allegedly hit pedestrians and a cyclist with a car on Thursday evening. Assistant Chief David Lazar, who gave a press conference this morning, said the man was believed to be a security guard at Dior, and said he discovered a firearm “on the ground” at the scene that he believed belonged to the guard. He did not give any details about whether the man was armed at the time police shot him. Lazar also could not confirm how many police officers fired their weapons at the man. The driver was allegedly driving on the sidewalk around 6:30 p.m. at Kearny and Post streets and hit two pedestrians, an 18-year-old and a 17-year-old, Lazar said, in pursuit of a man on an electric bicycle. After hitting […]

trending_flat
Mother of Olentangy High student that inspired sextortion bill hopes it saves lives

Editor's note: This story discusses suicide and sexual abuse. If you or someone you know is struggling, you can call or text 988.Jennifer Markus spent much of Wednesday watching The Ohio Channel as a bill to make "sextortion" a felony wound its way among lawmakers.She's a pediatric care nurse at Nationwide Children's Hospital where her colleagues have offered comfort after her son Braden Markus took his life three years ago when someone posing as a high school girl on social media asked him for intimate photos and then demanded $1,800 so they wouldn't be published.He initially refused. But within 30 minutes, the boy who loved sports and fireworks and Japanese food, who was about to get his driver's license, was gone."It's bittersweet," Mrs. Markus told The Dispatch Thursday. "Holy crap. my friends and a lot of people just got this […]

trending_flat
Street sheet – Mission Local

Mission Local produces enterprise reporting on San Francisco's most critical issues: police reform, corruption, public health, housing and homelessness. Learn more about us, and donate below keep us reporting.Subscribe to Mission Local's daily newsletter Source: missionlocal.org

Related

trending_flat
Burglars ransack Southern California homes while posing as deliverymen

Residents are frightened and angry as a group of suspects continue ransacking San Fernando Valley homes, leaving a trail of destruction behind.A Valley Village resident said she was stunned and shaken up after thieves targeted her home on Dec. 17 between 5 p.m. to 6 p.m.The break-in was captured on home surveillance cameras as a male suspect approached the house and appeared to be disguised as a delivery man.“Ten minutes after we left [our home], someone was knocking at the door and our dog was barking away,” she said. “Then within a minute, someone had broken into the back of the house, smashed the glass door, came in and locked the dog in a room and just trashed the house. They took all of my jewelry.”Photos of the aftermath showed drawers in every room were removed and emptied and all […]

trending_flat
Police bust man at Gwinnett McDonald’s they say tried to sell home he didn’t own

Gwinnett County police arrested a man at a local McDonald’s who they say attempted to sell a property he did not own by stealing the identity of its rightful owner.Police say 55-year-old Armond Long, of Lilburn, posed as the property owner and listed the land for sale on Zillow.The scheme unraveled when the actual owner discovered the listing while the sale was pending and contacted authorities.Records show the land was pending for $130,000 before law enforcement got involved.“He didn’t have any intention of selling that property, so he contacted local authorities,” said Cpl. Juan Madiedo.TRENDING STORIES: Authorities in Lake Havasu City, Arizona worked with Gwinnett County police to set up a sting operation.Long agreed to meet at a McDonald’s near the Mall of Georgia to sign final closing documents. An undercover Gwinnett officer, posing as a courier, handed Long documents […]

trending_flat
Mother of Olentangy High student that inspired sextortion bill hopes it saves lives

Editor's note: This story discusses suicide and sexual abuse. If you or someone you know is struggling, you can call or text 988.Jennifer Markus spent much of Wednesday watching The Ohio Channel as a bill to make "sextortion" a felony wound its way among lawmakers.She's a pediatric care nurse at Nationwide Children's Hospital where her colleagues have offered comfort after her son Braden Markus took his life three years ago when someone posing as a high school girl on social media asked him for intimate photos and then demanded $1,800 so they wouldn't be published.He initially refused. But within 30 minutes, the boy who loved sports and fireworks and Japanese food, who was about to get his driver's license, was gone."It's bittersweet," Mrs. Markus told The Dispatch Thursday. "Holy crap. my friends and a lot of people just got this […]

trending_flat
Family Mourns 6-Year-Old Who Died After Escaping Home, Running Across Interstate

A family in San Jose, California, is mourning their 6-year-old son King Holguin, a nonverbal and autistic child who was fatally struck by a car Friday, Dec. 13, on Interstate 280, per ABC 7 News.King was two weeks shy of his seventh birthday when he died.“I just want to hold him,” the boy’s father, who was not identified, told the outlet Monday. “I want him back, but I know he is in a better place. He was always outgoing, loving and the house is quiet without him. But I know everyone misses him and I miss him.”A news release from the California Highway Patrol obtained Wednesday by People confirmed a pedestrian “ran into the number three lane” of the northbound interstate that night and was struck by a 2024 Nissan Altima driven by a 36-year-old San Jose local.The pedestrian was […]

trending_flat
4 Things Retirees Should Stop Buying To Build Their Retirement Savings

monkeybusinessimages / iStock.com Maintaining financial stability during retirement is challenging for many retirees, because their income is fixed, whether it comes from Social Security, investments or pensions. Read More: 3 Things Retirees Should Sell To Build Their retirement Savings Be Aware: 10 Little Luxuries To Stay Away From in Retirement “Balancing enjoyment and security in retirement is about clarity and intention,” said Melissa Pavone, founder of Mindful Financial Partners. “By understanding your numbers, building a detailed cash flow plan, and revisiting it regularly with a trust advisor, you can embrace the retirement you’ve envisioned.” However, many retirees unknowingly spend money on items that drain their savings, making it harder to meet unexpected needs and stretch their money over time. Here are four things retirees should stop buying to build their retirement savings. According to Deloitte’s annual Digital Media Trends report, […]

trending_flat
US alarmed Russia close to accepting nuclear-armed North Korea

By Michelle NicholsUNITED NATIONS (Reuters) - The United States voiced alarm at the United Nations Security Council on Wednesday that Russia was close to accepting a nuclear-armed North Korea, as Moscow and Pyongyang defended their growing cooperation.Russian Foreign Minister Sergei Lavrov said in September that Moscow viewed the notion of "denuclearising" North Korea as a closed issue, as it understood Pyongyang's logic of relying on nuclear weapons as the foundation of its defence.Trusted news and daily delights, right in your inboxSee for yourself — The Yodel is the go-to source for daily news, entertainment and feel-good stories."Alarmingly, we assess that Russia may be close to accepting North Korea's nuclear-weapons program, reversing Moscow's decades-long commitment to denuclearize the Korean Peninsula," said U.S. Ambassador to the U.N. Linda Thomas-Greenfield."We believe that Moscow will become more reluctant not only to criticize Pyongyang's development […]

About Karl The Fog

Welcome to Karl The Fog, your digital gateway to the enigmatic world of San Francisco’s legendary mist. We are the storytellers, the observers, and the chroniclers of the ever-elusive, charismatic character known as Karl.

KARL THE FOG, and KARL THE FOG COFFEE logos, images, fonts, names, and other trademarks are trademarks of KARL THE FOG, LLC and may not be used without permission.

Login to enjoy full advantages

Please login or subscribe to continue.

Go Premium!

Enjoy the full advantage of the premium access.

Stop following

Unfollow Cancel

Cancel subscription

Are you sure you want to cancel your subscription? You will lose your Premium access and stored playlists.

Go back Confirm cancellation