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Globe and Mail
21-05-2025
- Business
- Globe and Mail
The Smartest Vanguard ETF to Buy With $500 Right Now
Choosing where to invest is easy when the stock market is steadily rising. But what about when the market is as volatile as it has been in 2025? That's a different story. Vanguard offers 91 exchange-traded funds (ETFs), so you can find great alternatives within its family of funds. However, so many options can be overwhelming, especially when market uncertainty reigns. Which is the smartest Vanguard ETF to buy with $500 right now? Top contenders There's really never a wrong time to invest in the Vanguard S&P 500 ETF (NYSEMKT: VOO) if you're a long-term buy-and-hold investor. Though the benchmark index and the funds that track it almost sank into bear market territory earlier in 2025, this Vanguard ETF is now up year to date. I don't think long-term investors would go wrong by putting money into this fund now. However, the Vanguard S&P 500 ETF could remain highly volatile over the near term. While most U.S. stocks have taken investors on wild roller-coaster rides this year, many international stocks have been big winners. Unsurprisingly, the Vanguard ETFs that own international stocks have performed well, too. Nine of the top 10 best-performing Vanguard ETFs year to date focus on companies based outside of the U.S. I think several of these funds are still top contenders for investors' money. The best of the bunch is probably the Vanguard FTSE Europe ETF (NYSEMKT: VGK). It has soared by around 21% year to date. This fund owns shares of 1,241 companies based in major European markets. Its largest holdings include SAP, Nestle, ASML Holding, Novartis, and Roche. The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is another good international ETF that should especially appeal to income investors. It's up roughly 16% year to date, and as its name indicates, it focuses on international stocks with high dividend yields. The ETF's dividend yield is about 4.3%. My pick for the best Vanguard ETF right now International stocks -- and Vanguard's international ETFs -- haven't performed as well over the last five to 10 years as they have more recently. My biggest reservation about choosing one of the Vanguard international ETFs as the best pick to buy now is that the global market dynamics could change. However, I think another Vanguard ETF should be an excellent alternative for investors, regardless of what happens in the market. I'm talking about the Vanguard Utilities ETF (NYSEMKT: VPU). This fund is up close to 10% year to date, earning it a spot on the list of the top 10 best-performing Vanguard ETFs of 2025 so far. The Vanguard Utilities ETF owns 68 U.S. utility stocks. Its top holdings include NextEra Energy, Southern Company, Duke Energy, Constellation Energy, and American Electric Power. Utility stocks typically hold up well during times of market volatility. Investors recognize that utility companies' businesses are more stable and reliable than most, with many of them operating as monopolies in the areas they serve. Utilities also often pay attractive dividends. The Vanguard Utilities ETF's dividend yield stands at about 2.9%. The artificial intelligence (AI) trend is providing a nice tailwind for many utility stocks. The data centers that provide the computing power required by AI models require massive amounts of electrical power to operate, and the rapid growth of this computing infrastructure is pushing electricity demand in the U.S. higher. This factor gives the Vanguard Utilities ETF better growth prospects going forward than it might have had just a few years ago. Like all Vanguard ETFs, the Vanguard Utilities ETF has low fees. Its annual expense ratio is only 0.09%, a fraction of the 1.01% average annual expense ratio of similar funds. A couple of caveats I'd be remiss if I didn't point out a couple of things about this ETF. First, it's not totally immune to overall market volatility. For example, at one point this year, the Vanguard Utility ETF fell to 8% below its previous high. Second, other Vanguard ETFs could deliver greater gains over the long term. However, if you're looking for the smartest Vanguard ETF to buy with $500 right now, I think the Vanguard Utility ETF is it. Should you invest $1,000 in Vanguard Utilities ETF right now? Before you buy stock in Vanguard Utilities ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Utilities ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!* Now, it's worth noting Stock Advisor 's total average return is975% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Constellation Energy, NextEra Energy, and Vanguard S&P 500 ETF. The Motley Fool recommends Duke Energy, Nestlé, and Roche Holding AG. The Motley Fool has a disclosure policy.
Yahoo
28-04-2025
- Business
- Yahoo
How stock-market investors are navigating the wait for Trump trade deals
It seems hard to get too excited about stocks despite their recent rally, as tariff uncertainty overwhelms upcoming data on the U.S. economy. While investors will closely watch reports in the coming week on jobs, inflation and gross domestic product, the data will be backward-looking amid heightened concern that President Donald Trump's sweeping tariffs announced on April 2 may inflict future damage on the economy. My eldest son refused to share his father's $500K inheritance with his siblings. Should I cut him off? 'I'm very cynical': My stepmother, 85, makes bizarre requests for money from my father's $10M trust. Should I be concerned? 'An argument ensued': My mother entrusted my inheritance to her second husband. That's when it all went horribly wrong. What a plunge in shipping traffic from China says about tariffs, stocks and the economy Stocks have had a good bounce. But here's why this investment manager thinks lows will be retested. 'We don't want to take too much risk at the country level,' or take 'big views on overweighting or underweighting the U.S. versus the rest of the world,' said Alexis Deladerrière, co-deputy chief investment officer for the fundamental equity business at Goldman Sachs Asset Management, in an interview. 'I think people should diversify their portfolios.' Markets are grappling with uncertainty over where the size of Trump's tariffs will ultimately shake out as the White House aims to negotiate deals around the world. Investors in particular are trying to discern where U.S. talks may stand with China, the world's second largest economy. 'Unless you're sitting in the Oval Office, you don't really know what the future holds,' said Andrew Slimmon, a senior portfolio manager for U.S. equities at Morgan Stanley Investment Management, in a phone interview. So 'conjecture' concerning companies' future earnings seems 'kind of crazy' and a 'borderline waste of time,' he said. The U.S. stock market has lagged the rest of the world since President Trump announced 'liberation day' tariffs on April 2, with European stocks up since then while the S&P 500 SPX is down over the same stretch. Since April 2, the S&P 500, a gauge of U.S. large-cap stocks, has fallen 2.6% through Friday. By contrast, the iShares MSCI ACWI ex U.S. ETF ACWX, an exchange-traded fund that tracks an index of global stocks outside the U.S., rose 1.4% over that same period. And the Vanguard FTSE Europe ETF VGK, which tracks an index of equities in major European markets, has climbed 2.5% since April 2. European stocks have recently benefited from the E.U.'s plans to ramp up defense spending as well as Germany's push to increase infrastructure investment. But the European Union also faces large levies announced by Trump on April 2, with investors watching for whether those too may be reduced through negotiations with the White House. Tariffs have been 'overwhelming' for markets, and now 'we are neutral' stocks and bonds globally, said Phil Camporeale, a portfolio manager for J.P. Morgan Asset Management's global allocation strategy, by phone. Camporeale explained that he had been overweight stocks globally coming into 2025, but moved the allocation to U.S. equities to 'flat' by the end of March, 'as the shine of US exceptionalism was coming off,' and he still saw reason to be overweight the rest of the world. Then, in April, with 'so much global uncertainty,' Camporeale said that he also moved international equities to neutral as well. Read: Where Trump's tariffs and economic promises stand as he nears 100 days in office Tariff negotiations probably won't resolve quickly across the board, according to Deladerrière. 'Our view is that as we progress through these trade negotiations we are going to slowly get more certainty,' he said. 'The new rules may involve tariffs at different levels for different industries and different countries,' he said. Ultimately, it could take 'at least months,' but probably years for the U.S. to totally reshape its trade relationships, Deladerrière expects. But 'what's important for equity markets is the light at the end of the tunnel,' he said. Signs that negotiations are moving in the right direction, as the White House works out trade deals country by country and sector by sector, will be positive for equity markets, according to Deladerrière. Still, he said that, 'until we know the new rules of the game, it's hard to know how businesses are going to adapt' and reshape their supply chains. In the meantime, he said he's focused on identifying high-quality companies with 'good pricing power,' high margins, as well as strong cash flow and balance sheets to help them through the uncertain and volatile tariff environment. 'This is where we want to take our bets,' he said, as opposed to trying to bet on one country versus another. Read: Deutsche Bank sees major trouble ahead for the U.S. dollar In the coming week, investors will get readings on the U.S. employment situation in April and on March inflation. The U.S. jobs report is due on May 2, while the data on inflation, as measured by the personal consumption expenditures price index, will be released on April 30. The U.S. economic calendar also includes an April 30 report on GDP growth in the first quarter. 'We should expect the economic data to continue to soften,' Deladerrière said. But he added that reports on the U.S. economy in the coming week won't reflect the deterioration that investors worry tariffs risk causing over the next six to nine months. Tariff uncertainty has many businesses on hold when it comes to making hiring and spending decisions, he said, which has led to expectations for slowing growth in the U.S. The U.S. stock market closed Friday with weekly gains, as the S&P 500 rose a fourth straight day for its longest winning streak since January. But the index was still down 1.5% so far in April, remaining in the red this month after markets were rocked by 'liberation day' tariffs. Pointing to the S&P 500's trough this year on April 8, Slimmon said that he viewed the index's steep drawdown from its record high on Feb. 19 as a buying opportunity for investors. The S&P 500 tumbled almost 19% over that period, FactSet data show. Even if tariffs are hard to try and figure out, investing after such a large drop has historically paid off over the next year, he said. The S&P 500 ended Friday at 5,525.21, down 6.1% year to date. 'I think tariffs will whip around the equity market,' whereas high-yield corporate bonds look 'pretty stable,' said Camporeale. High-yield bonds are rated below investment grade, but he said they're providing 'good yield' of around 7.5% for about half the volatility of stocks. He said he likes high-yield bonds with shorter maturities of 1 to 3 years and that he is avoiding the riskiest parts of that market. While the risk of recession has risen due to tariffs, Camporeale said that, at least for now, he's expecting 'pretty anemic' growth in the U.S. this year of less than 1%. Over the next few months, the upside for the S&P 500 might be capped at around 5,800, according to Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services. 'There's been an open debate about, ok, how far are we going to go with these tariffs,' he said in a phone interview. And 'right now the range of outcomes is wide.' 'I survived a head-on car wreck': I'm on Medicaid, but inheriting $290K. How do I protect it from the 5-year look-back rule? 'She's kept him afloat': I'm 78 and leaving my daughter, 41, my life savings, but her partner is a mooch. How can I protect her? How high-yield bond funds like these can lower your investment risk Wave of U.S. data this week may give tariff-weary investors more to worry about Stock futures plunge as ugly stretch for Wall Street looks set to worsen Sign in to access your portfolio
Globe and Mail
30-03-2025
- Business
- Globe and Mail
The Top 3 Vanguard ETFs of 2025 (so Far) Share This 1 Striking Common Denominator
Baskin-Robbins has nothing on Vanguard. The ice cream chain is famous for offering 31 flavors to ice cream lovers. Meanwhile, Vanguard's family of exchange-traded funds (ETFs) features 90 choices for investors. However, some of those funds will probably "taste" very similar. The top three Vanguard ETFs of 2025 (so far) share one striking common denominator. Funds of a feather Vanguard markets multiple types of ETFs. You can buy funds that focus on specific U.S. sectors. Some ETFs own only large-cap stocks. Others specialize in small-cap stocks and mid-cap stocks. Vanguard offers ETFs with only growth stocks in their portfolios and others with only value stocks. Some Vanguard funds allow you to invest in bonds of varying maturities. However, the three best performing Vanguard ETFs year to date don't focus on any of those asset classes. Instead, they all concentrate on international stocks. The Vanguard FTSE Europe ETF (NYSEMKT: VGK) ranks as the top Vanguard ETF of 2025 with a return of around 12%. This fund owns 1,263 stocks, all headquartered in the key European markets of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) has gained nearly 10% year to date. As its name indicates, this ETF focuses on international stocks that offer above-average dividend yields. Its portfolio features 1,491 stocks, with top holdings including Swiss food and beverage company Nestlé, healthcare giant Roche , and big drugmaker Novartis. Nearly 45% of the Vanguard International High Dividend Yield ETF's stocks are based in Europe. The Vanguard FTSE Developed Markets ETF (NYSEMKT: VEA) has risen over 8% in 2025, landing it in the No. 3 spot among Vanguard's best performing ETFs. This fund owns a diversified portfolio of 3,910 international stocks, from large-cap to small-cap. Its top holdings include German software company SAP, Danish pharmaceutical company Novo Nordisk, and Dutch semiconductor fabrication equipment maker ASML. Why are international Vanguard ETFs performing so well? It isn't only Vanguard's top three ETFs this year that focus on international stocks. Eight of the fund manager's top 10 ETFs do so as well. Could that be a coincidence? Nope. One reason international stocks, especially those based in Europe, are outperforming their U.S. peers is that they're more attractively valued. For example, even with its strong year-to-date gains, the Vanguard FTSE Europe ETF's price-to-earnings (P/E) ratio is 17.4. By comparison, the Vanguard S&P 500 ETF trades at 26.9 times earnings. European defense stocks have been especially big winners. Why? European Union members including Germany plan to increase their defense spending over the next few years. Economic data from European governments has also been better than expected. And the trend isn't limited to only one sector. European banking, manufacturing, and services have seen improvement. Some wishful thinking could also be a factor. The Trump administration's prioritization of negotiating an end to the war between Russia and Ukraine has raised hopes that energy prices could come down and pave the way for significant investments in reconstruction in Ukraine. Should you buy these Vanguard ETFs? When so many similar ETFs are performing well, many investors could be tempted to jump on the bandwagon. Is that a good idea? Maybe, but maybe not. International stocks could continue to outgain U.S. stocks over the near term. If this happens, the Vanguard FTSE Europe ETF, the Vanguard International High Dividend Yield ETF, and the Vanguard FTSE Developed Markets ETF could remain top performers. However, a severe and prolonged trade war between the U.S. and Europe (as well as with other regions) resulting from the Trump administration's tariffs could weigh on U.S. and international stocks alike. The "peace dividend" from a cessation of hostilities between Russia and Ukraine could also be less likely than hoped. Investing in Vanguard ETFs that focus on international stocks to provide more portfolio diversification isn't a bad idea. But betting the farm that the current trend of these ETFs outperforming funds focused on other asset classes over the long term might not pay off. 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: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $284,402!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,312!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $503,617!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon. Continue » *Stock Advisor returns as of March 24, 2025 Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Vanguard S&P 500 ETF, and Vanguard Tax-Managed Funds-Vanguard Ftse Developed Markets ETF. The Motley Fool recommends Nestlé, Novo Nordisk, and Roche Holding AG. The Motley Fool has a disclosure policy.
Yahoo
16-03-2025
- Business
- Yahoo
Prediction: This Vanguard Index Fund Will Continue to Beat the S&P 500 in 2025
The Trump administration has unnerved investors with its departure from traditional trade policy. The average tax on U.S. imports fell to 2.5% under the previous administration, but the tariffs Trump has imposed or plans to impose would raise that figure to 8.4%, according to the nonpartisan Tax Foundation. That would be the highest level since 1946. Fearing the impact of a trade war on the U.S. economy, investors have rotated away from domestic equities and into international stocks. The three major U.S. market indexes have declined year to date, including a 4% slide in the S&P 500 (SNPINDEX: ^GSPC). Meanwhile, several international indexes have generated robust returns, as detailed below: The European STOXX Europe 50 index has advanced 8%. The British FTSE 100 index has advanced 4%. The French CAC 40 index has advanced 9%. The German DAX has advanced 15%. Importantly, the returns above are shown in local currencies. But the U.S. dollar index has fallen over 4% year to date, meaning U.S. currency has become less valuable versus a basket of foreign currencies. Consequently, the STOXX Europe 50 has advanced 13% year to date as measured in U.S. dollars. Investors seeking international exposure should consider the Vanguard FTSE Europe ETF (NYSEMKT: VGK), the best-performing Vanguard index fund year to date. Read on to learn more. The Vanguard FTSE Europe ETF measures the performance of more than 1,200 European stocks. It is heavily weighted toward equities in the United Kingdom (24%), France (16%), and Germany (14%), the three largest economies in Europe. The 10 largest holdings in the Vanguard FTSE Europe ETF are listed by weight below: SAP: 2.4% ASML Holding: 2.3% Novo Nordisk: 2.1% Nestlé: 1.8% Roche Holding: 1.8% AstraZeneca: 1.7% Novartis: 1.7% HSBC Holdings: 1.5% Shell: 1.5% LVMH Moët Hennessy Louis Vuitton: 1.5% American stocks crushed European stocks in the last decade, but that trend has reversed course in 2025 due to uncertainty surrounding the health of the U.S. economy. Consumer sentiment in the U.S. has plummeted since December as the Trump administration has implemented tariffs on imports from several countries. Consequently, the Vanguard FTSE Europe ETF has returned 14% year to date, while the S&P 500 has declined 4%. And that outperformance could continue in the remaining months of the year due to discrepancies in economic growth, looser monetary policy, and cheaper stock market valuations. Euro area gross domestic product (GDP) growth is forecast to accelerate into 2027, while U.S. GDP growth is forecast to decelerate through 2026. Also, the European Central Bank has cut its benchmark rate by 185 basis points and has yet to pause. But the Federal Reserve has cut its benchmark rate by only 100 basis points and has paused its cutting cycle. Finally, European equities are relatively cheap compared to U.S. equities. The Vanguard FTSE Europe ETF trades at 14 times earnings, and earnings are forecast to increase at 10% annually in the next few years. Meanwhile, the S&P 500 trades at 22 times earnings, which are forecast to increase at 9% annually in the next few years. The last item of consequence is the expense ratio. The Vanguard FTSE Europe ETF carries a below-average expense ratio of 0.06%. That means shareholders will pay just $6 annually on every $10,000 invested in the fund. Here's the bottom line: The Vanguard FTSE Europe ETF is a sensible way for investors to get exposure to stock markets across Europe. The index has handily outperformed the S&P 500 year to date, and I think that trend will persist through the end of the year, especially if the Trump administration's trade policy continues to weigh on the U.S. economy. However, even if I am incorrect about the Vanguard FTSE Europe ETF outperforming the S&P 500, Lisa Shalett at Morgan Stanley says such investments are an "inexpensive way to hedge portfolios against a potential U.S. stock market pullback." I agree wholeheartedly. 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: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $315,521!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,476!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $495,070!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 14, 2025 HSBC Holdings is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends AstraZeneca Plc, HSBC Holdings, Nestlé, Novo Nordisk, and Roche Holding AG. The Motley Fool has a disclosure policy. Prediction: This Vanguard Index Fund Will Continue to Beat the S&P 500 in 2025 was originally published by The Motley Fool Sign in to access your portfolio
