|Bid||60.32 x 2200|
|Ask||60.36 x 1400|
|Day's Range||60.29 - 60.31|
|52 Week Range||59.55 - 60.51|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||0.25|
|Expense Ratio (net)||0.07%|
Ultrasafe investments, like short-term Treasuries, are an effective way to diversify an all-stock portfolio as they tend to hold up well during periods of market distress. Treasuries are backed by the full faith and credit of the U.S. government, so they don't carry the credit risk that is embedded in corporate bonds. Schwab Short-Term U.S. Treasury ETF SCHO provides great exposure to these stable assets.
[Editor's note: This story was last updated in February 2016. It has since been updated and republished.] Vanguard should probably be thanking Warren Buffett. In Berkshire Hathaway's (NYSE:BRK.B) 2014 shareholders letter, Buffett mentioned Vanguard funds in a big way. Specifically, he recommended that the cash left to his wife be invested 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund. Not just any index fund mind you, but a Vanguard fund in particular. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 A-Rated Stocks the Smart Money Is Piling Into Whether it be exchange-traded funds (ETFs) or mutual funds, the Oracle of Omaha believes Vanguard funds are the way to go. With that in mind, I've put together a portfolio of two ETFs, two mutual funds and a fifth wildcard. The resulting portfolio should be appropriate for Buffett's wife -- or anyone else, for that matter. ### Vanguard Funds Mutual Fund #1 -- Vanguard 500 Index Fund Admiral Shares (VFIAX) Allocation: 50% of Portfolio 10-year performance: 7.88% The goal here is to keep costs to a minimum while generally sticking to Buffett's hypothesis when it comes to his wife's investments. In that case, it makes more sense for the S&P 500 investment to be a mutual fund rather than an ETF (although Vanguard Funds do offer commission-free ETFs) to avoid paying commissions on the largest segment of the portfolio. The Vanguard 500 Index Fund Admiral Shares (VFIAX) charge an annual expense ratio of just 0.05%. Your fees would amount to a mere $25 on a $50,000 portfolio. That's hard to beat, and Buffett knows it. The largest holdings in this fund include Apple (NASDAQ:AAPL), Exxon Mobil (NYSE:XOM) and Google (NASDAQ:GOOGL, NASDAQ:GOOG). The minimum investment is $10,000. EDITOR'S NOTE: Corrects to $25 in annual expenses. ### Vanguard Funds Mutual Fund #2 -- Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) Allocation: 20% of Portfolio 10-year performance: 14.9% The VFIAX covers off the large-cap portion of the portfolio quite nicely. While Buffett might not be fond of mid-cap stocks being added to the mix, evidence suggests mid-caps outperformed large-cap stocks over a four-year period between 2009 and 2013. In fact, John Hancock published a report in 2012 that cautions investors about underweighting mid-caps because of an assumption that a large-cap fund combined with a small-cap fund will do the job. That's simply not the case. Mid-cap stocks tend to provide an attractive combination of risk and reward. For this reason, I recommend the Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX), which tracks the CRSP Mid Cap Index, an index composed of stocks that fall between the top 70%-85% of investable market capitalization. The average company in the index has a market cap of $8.2 billion. * 10 Companies That Could Post Decelerating Profits They're big enough to survive an economic hit but small enough to still be growing. With an expense ratio of 0.1%, this entry on our list of Vanguard funds is giving you safety and performance in one. Top holdings include Forest Laboratories (FRX) and Illumina (ILMN). ### Vanguard Funds ETF #1 -- Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) Allocation: 10% of Portfolio 5-year performance: 1.8% Although I just said mid-caps are a key part of any portfolio and tend to outperform small caps while utilizing less risk, there is always a place for small caps in your portfolio. That's especially true when the two previous picks from Vanguard Funds are almost 100% invested in the U.S. with virtually no international exposure. That's just not smart when you consider how strong European stocks have been since last August. For this reason, a little bit of love outside America makes total sense. My recommendation is to go with the Vanguard FTSE All-World ex-US Small-Cap ETF (VSS), a fund that tracks the performance of the FTSE Global Small Cap ex US Index, which consists of approximately 3,050 stocks in 46 countries including the United Kingdom, Canada, Japan and Taiwan. Investing in both developed and emerging markets, the fund gives you good exposure to some of the world's future stars at an annual expense ratio of just 0.2%. With such low fees, it's no wonder Vanguard Funds has $2.2 billion invested in this ETF. ### Vanguard Funds ETF #2 -- Vanguard Short-Term Government Bond ETF (VGSH) Allocation: 10% of Portfolio 5-year performance: 0.73% Buffett recommends that 10% of his wife's portfolio go to short-term government bonds. Vanguard Funds has an ETF that does exactly that. The Vanguard Short-Term Government Bond ETF (VGSH) invests in investment-grade U.S. government bonds with average maturities between one and three years. The risk, on a scale of one to five, is one -- meaning this Vanguard ETF is for conservative investors looking for stable share prices. * 7 Beaten-Up Housing Stocks Due for a Bounce Back And with an expense ratio of 0.12%, this ETF should give you peace of mind for your short-term needs. ### Vanguard Funds Wildcard -- Vanguard Consumer Staples ETF (VDC) Allocation: 10% of Portfolio 10-year performance: 11.9% On this final piece of the puzzle, I'm going defensive. The mutual fund version of the S&P 500 has less than 10% invested in consumer staples' stocks. I mean to remedy that by putting the final 10% in the Vanguard Consumer Staples ETF (VDC), a collection of 109 household names including Procter & Gamble (NYSE:PG) and Coca-Cola (NYSE:KO). Since its inception in 2004, VDC has had but one year of negative annual total returns, and that was in 2008 when it experienced a 17% decline -- 20 percentage points better than the S&P 500. When the you-know-what hits the fan, you'll be glad you own this particular low-cost ETF (with a 0.10% expense ratio) from Vanguard Funds. It seems the "keep it simple" rule holds true, and Warren Buffett is the No. 1 follower. As of this writing, Will Ashworth did not own a position in any of the aforementioned securities. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Growth Stocks With the Future Written All Over Them * 7 Reasons Why Buffett's Bet on Apple Stock Is a Good One * 10 Companies That Could Post Decelerating Profits Compare Brokers The post Take Buffett's Advice: 5 Vanguard Funds to Buy appeared first on InvestorPlace.
U.S. two-year treasury note yield briefly dropped below 2.4% on Jan 3, reaching parity with the federal funds effective rate for the first time since 2008.
As chances of a Fed rate hike in December are pretty high and can cause some turmoil in the markets, these ETF areas could provide cushion to investors.
Exchange-traded funds (ETFs) had an incredible year in 2017. A recent report by ETF.com indicates that ETFs gathered new assets totaling more than $450 billion for that year, in some part thanks to the strength of the U.S. equity space. In 2018, although ETFs are still among the hottest and most popular investment vehicles for investors across the country, the figures are likely to be somewhat less impressive.
Interest rates have steadily pushed higher in recent months, and the Federal Reserve has signaled its intent to raise interest rates at least two more times before the end of the year to head off an overheating economy with high inflation. While rising interest rates can drag on bond fund returns, they have less of an impact on bond funds with shorter durations. "From post-crisis through 2017, investors in fixed income have had to move out along the curve to generate some yield, extending some duration risk, or taking a dip in quality," Alfonzo Bruno, a research analyst for fixed-income strategies with Morningstar, told CNBC.
In the wake of an escalating trade war between the U.S. and China, ETF investors turned risk-off and fled toward the relative safety of fixed-income assets. In light of the heightened tariff concerns, ...
The Conference Board LEI (Leading Economic Index) includes the credit conditions in the US economy as one of its constituents. Changes to six financial market instruments are modeled to construct this credit index.
Bonds can lose money, and having too much money in bonds can be a mistake. Owning bond funds isn't exactly the same as owning bonds.
Fixed-income investors can also target the lower end of the yield curve through focused exchange traded fund plays as well. According to the latest Commodity Futures Trading Commission data, short-term traders turned to a bullish wager on two-year notes in the week ended May 22, Bloomberg reports. The shift in strategy came days after yields on the maturity, the most vulnerable benchmark note when it comes to expectations for Federal Reserve policy, hit its the highest in a decade.
The Conference Board uses credit conditions in the economy as one of the components of the leading economic index (or LEI) economic model. Changes to six financial market instruments are modeled to construct this credit index. ...
Rising interest rates can hurt investors' fixed-income portfolios. In this article, I will examine the case of PowerShares Senior Loan Portfolio BKLN , which has been a popular choice for investors looking to lessen the risk of rising rates. It is also perhaps the poster child for the futility of investors' efforts to stay a step ahead of the Fed. I will also explore other options from the menu of fixed-income exchange-traded funds, and beyond, that might help investors better manage interest-rate risk in their portfolios.
The Conference Board uses the credit conditions in the economy as one of the constituents of the Leading Economic Index (or LEI) economic model. This credit index is constructed by modeling changes to six financial market instruments. The changes to this index help us understand the state of credit conditions in the economy. ...