Despite dissecting economic data from all releases of varying frequencies, the market is yet to find a direction. Such bizarre circumstances in which good news, such as historically low initial jobless claims, got a volatile reception by investors don’t seem to catch a break anytime soon.
Moreover, if the Federal Reserve ends up increasing interest rates beyond 5%, it could be wise to increase exposure to blue chip stocks. Barring apocalyptic scenarios, their size and profitability would keep their prospects robust despite high borrowing costs and regardless of market sentiments.
To that end, Vanguard S&P 500 ETF (VOO), Vanguard Dividend Appreciation ETF (VIG), and Invesco S&P 500 Equal Weight ETF (RSP) could be ideal investments now.
Vanguard S&P 500 ETF (VOO)
VOO is an exchange-traded fund launched and managed by The Vanguard Group, Inc. It offers exposure to stocks of mega and large-cap companies in the U.S. equity market by tracking the S&P 500 Index using the full replication technique. Since the index has some of the safest and most profitable companies in the world, it could serve as the building block of many portfolios.
With $285.32 billion in AUM, VOO’s top holding is Apple Inc. (AAPL), which has a 6.04% weighting in the fund. It is followed by Microsoft Corporation (MSFT) at 5.55% and Amazon.com, Inc. (AMZN) at 2.32%. The fund has a total of 506 holdings, with the top 10 assets comprising 24.34% of AUM.
VOO’s expense ratio is 0.03%, significantly lower than the category average of 0.37%. The fund pays $5.29 per unit annually as dividends. This translates to a yield of 1.24% at the current price, higher than the category average of 0.95%. It saw a net inflow of $257.19 million over the past month and $10.01 billion over the past six months. Its beta is 0.99.
Over the past month, VOO has gained 4% to close the last trading session at $374.11. The fund’s NAV was $374.06 as of February 9, 2023.
VOO’s robustness is reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VOO has an A grade for Trade and a B for Buy & Hold. It ranks #103 of 274 funds in the A-rated Large Cap Blend ETFs category.
Click here to see all ratings for VOO.
Vanguard Dividend Appreciation ETF (VIG)
VIG is an exchange-traded fund launched and managed by The Vanguard Group, Inc. The fund seeks to track the performance of the NASDAQ US Dividend Achievers Select Index. Hence, it provides exposure to dividend-paying large-cap companies that exhibit growth characteristics within the U.S. equity market.
With $66.45 billion in AUM, VIG only invests in companies that have increased payouts for at least ten consecutive years and are most likely to continue to pay out dividends in the future.
VIG’s top holding is UnitedHealth Group Incorporated (UNH), which has a 4.12% weighting in the fund. It is followed by Johnson & Johnson (JNJ) at 3.84% and Microsoft Corporation (MSFT) at 3.43%. The fund has a total of 291 holdings, with its top 10 assets comprising 29.74% of its AUM.
VIG has an expense ratio of 0.06%, lower than the category average of 0.37%. The fund pays $2.55 per unit annually as dividends. This translates to a yield of 1.53% at the current price, which is higher than the category average of 1.53%.
VIG’s net inflow came in at $659.19 million over the past six months and $2.86 billion over the past year. The fund has a beta of 0.86.
VIG has gained 1% over the past six months to close the last trading session at $154.64 million. The fund’s NAV was $154.63 as of February 9, 2023.
VIG’s fundamental strength is also reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It also has an A grade for Trade and Buy & Hold and a B for Peer.
Unsurprisingly, VIG tops the list of 274 funds in the A-rated Large Cap Blend ETFs group.
Invesco S&P 500 Equal Weight ETF (RSP)
RSP is an exchange-traded fund launched and managed by Invesco Capital Management LLC. The fund is linked to an equal-weighted S&P 500 index, meaning that component companies receive approximately equal allocations. This results in an exposure that is more balanced than other alternatives.
With $37.02 billion in AUM, RSP’s equally distributed holdings result in its top 10 assets comprising 2.72% of its AUM.
RSP has an expense ratio of 0.20%, lower than the category average of 0.47%. The fund pays $2.07 annually as dividends. This translates to a 1.28% yield at the current price, higher than the category average of 1.24%.
RSP’s net inflow came in at $1.48 billion over the past month and $2.23 billion over the past three months. The fund has a beta of 1.11.
RSP has gained 3% over the past month and 3.5% over the past six months to close the last trading session at $150.50. The fund’s NAV was $150.49 as of February 9, 2023.
RSP has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system. It also has an A grade for Trade, Buy & Hold, and Peer. It is ranked # 2 in the same category.
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VOO shares were trading at $374.88 per share on Friday afternoon, up $0.77 (+0.21%). Year-to-date, VOO has gained 6.70%, versus a 6.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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