Large-cap ETFs are considered a good investment because they offer stability and reliability due to the established nature of the large companies they include. Moreover, these ETFs often include companies that pay dividends and provide income.
To that end, investors could look to invest in quality large-cap ETFs such as Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV), and SPDR S&P 500 ETF Trust (SPY). Before diving deeper into these ETFs, let’s discuss why large-cap blend ETFs could be secure investments.
The US economy sees a slower first-quarter GDP growth at 1.6%, with consumer spending moderation, inflation and a widening trade deficit affecting economic growth.
Trade tensions between the U.S. and China are causing market volatility and reduced investor confidence, with the IMF urging open trade policies and cooperation to resolve disputes. Washington’s imposition of new tariffs triggers concerns about supply chain disruptions and retaliatory actions, impacting global economic output.
Hence, investing in large-cap ETFs could be a smart move in the current economic climate. These ETFs offer diversification, stability, and protection against inflation and market volatility. They provide access to the long-term growth potential of large-cap companies without the need to pick individual stocks, reducing risk compared to owning single large-cap stocks.
Considering these conducive trends, let’s evaluate the three Large Cap Blend ETFs picks, starting with number three.
ETF #3: Vanguard S&P 500 ETF (VOO)
VOO is an exchange-traded fund launched and managed by The Vanguard Group, Inc. The fund invests in public equity markets in the United States. It invests in stocks of companies operating across diversified sectors, specifically targeting growth and value stocks of large-cap companies. VOO seeks to track the performance of the S&P 500 Index by using the full replication technique.
With $456.30 billion in assets under management, VOO’s top holding is Microsoft Corp. (MSFT), with a 6.84% weighting, followed by Apple Inc. (AAPL), with a 5.85% weighting, and NVIDIA Corporation (NVDA), with 5.05%. It has a total of 504 holdings.
VOO has an expense ratio of 0.03%, lower than the category average of 0.37%. VOO’s net inflows were $41.68 billion over the past six months and $71.20 billion over the past year. It currently has a NAV of $483.34.
The ETF pays an annual dividend of $6.41, which yields 1.33% on the current price. It has a four-year average dividend yield of 1.51%. Its dividend payouts have increased at a CAGR of 6% over the past three years and 4.7% over the past five years.
VOO has gained 28% over the past year and 18.8% over the past nine months to close the last trading session at $483.44.
VOO’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
VOO has an A grade for Buy & Hold and Trade and a B for Peer. It is ranked #3 out of 280 ETFs in the A-rated Large Cap Blend ETFs category. Click here to access all of VOO’s POWR Ratings.
ETF #2: iShares Core S&P 500 ETF (IVV)
IVV is an ETF launched by BlackRock, Inc. and managed by BlackRock Fund Advisors. It is one of the largest ETFs in the world, offers exposure to one of the world’s best-known and most widely followed stock indexes. This ETF tracks the S&P 500 Index, which includes many large and well-known U.S. firms.
With $465.38 billion in AUM, the fund’s top holding is MSFT, with a 7.16% weighting, followed by AAPL, with a 6.21% weighting, and NVDA, with 5.25%. It has a total of 504 holdings.
IVV has an expense ratio of 0.03%, lower than the category average of 0.37%. It currently has a NAV of $528.46. Its net inflows came in at $24.99 billion over the past six months.
The fund’s annual dividend of $6.92 yields 1.31% on the current share price. Its four-year average yield is 1.53%. Its dividend payouts have increased at a CAGR of 6.7% over the past three years and 4.5% over the past five years.
IVV has gained 19.6% over the past nine months and 28% over the past year to close the last trading session at $532.39.
IVV’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold and Trade and a B for Peer. It is ranked #2 in the same group. To access all the POWR Ratings for IVV, click here.
ETF #1: SPDR S&P 500 ETF Trust (SPY)
SPY is an ETF fund launched and managed by State Street Global Advisors, Inc. The fund aims to provide before-expenses investment results that correspond with the price and yield performance of the S&P 500 Index. It follows a replication strategy and offers exposure to large-cap U.S. stocks.
With $535.28 billion in assets under management, SPY’s top holding is MSFT, with a 7.13% weighting, followed by AAPL, with a 6.24% weighting, and NVDA, with 5.27%. It has a total of 504 holdings.
SPY has an expense ratio of 0.09%, lower than the category average of 0.37%. SPY’s net inflows were $31.21 billion over the past six months and $35.76 billion over the past year. It currently has a NAV of $525.83.
The ETF pays an annual dividend of $6.72, which yields 1.28% on the current price. It has a four-year average dividend yield of 1.47%. Its dividend payouts have increased at a CAGR of 6.5% over the past three years and 5.1% over the past five years.
SPY has gained 27.9% over the past year and 16.4% over the past six months to close the last trading session at $529.50.
SPY’s POWR Ratings reflect its bright prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
SPY has an A grade for Buy & Hold and Trade and a B for Peer. Within the Large Cap Blend ETFs group, it is ranked first. To get all of SPY’s POWR Ratings, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
VOO shares were trading at $487.09 per share on Friday afternoon, up $3.65 (+0.76%). Year-to-date, VOO has gained 11.87%, versus a 11.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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