271.06 +0.01 (0.00%)
Pre-Market: 8:00AM EDT
|Bid||270.74 x 1000|
|Ask||270.83 x 1300|
|Day's Range||270.90 - 271.92|
|52 Week Range||214.83 - 272.79|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||1.00|
|Expense Ratio (net)||0.03%|
Editor's note: This story was originally published in January 2019 and has since been updated and republished.Index funds are responsible for saving investors like you and me untold billions of dollars in fees over the past couple of decades. They've also spared us countless headaches. (I don't know about you, but I'm glad I don't have to pick specific stocks to buy to get exposure to utilities or play the growth in India's middle class.) And the best index funds … well, they've made us a lot of money, which is the point of it all.Source: Investment Zen via Flickr (Modified)But index funds are also contributing to an issue that could blow up in our faces.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe push into index funds has intensified to the point that some experts believe it's not only driving the market higher, but it's causing a valuation bubble. In short, if you buy into any fund (index or not), the fund must invest that money into more stocks -- and all that buying is distorting valuations. The danger, then, is that when that bubble pops, many supposedly safe index funds will feel the pain worse than other parts of the market.The lesson here is that the best index funds to buy for the foreseeable future aren't all going to look the same. * 7 Top-Rated Biotech Stocks to Invest In Today Some top index fund picks will be so buy-and-hold-oriented that you won't need to worry about the bubble popping in a year or two or three because you plan on holding for 20 years, maybe 30. Some of the best picks for next year will only be worth buying into for tactical trades of a week or two at a time.So the following is a list of the best index funds for everyone -- from long-term retirement-minded investors to click-happy day traders. And this includes a few funds that I either hold currently or have traded in the past.In no particular order … iShares Core S&P 500 ETF (IVV)Type: Large-Cap Equity Expenses: 0.04%, or $4 annually for every $10,000 invested.Every year, I take a look at the best index funds for investors, and the Vanguard S&P 500 ETF (NYSEARCA:VOO) is always at the top of my list.The argument is typically the same, and consists of two parts: * The S&P 500 Index is one of the best chances you have at solid investment performance. That's because most equity funds fail to beat the market, most hedge funds fail to beat the market, and, to quote Innovative Advisory Group, "individual investors as a group have no idea what they are doing." So if beating the market is so darned hard, just invest "in the market" and get the market's actual return. The VOO and two other exchange-traded funds allow you to do that. * The VOO is the cheapest way to invest in the S&P 500.But that second point has changed.In trying to position itself for advisers who may want to suggest the lowest-cost offerings, iShares parent BlackRock, Inc. (NYSE:BLK) lowered the fees on 15 of its Core-branded ETFs, including the S&P 500-tracking iShares Core S&P 500 ETF (NYSEARCA:IVV).Previously, the IVV charged 7 basis points. It's better than the SPDR S&P 500 ETF's (NYSEARCA:SPY) 9.45 bps, but still above VOO's 5 bps. Now, though, IVV falls closest to the cellar at just 4 basis points in annual fees. Thus, the recommendation stands. Buy the market for as cheap as you can, and right now, that's the IVV.And that note of caution? If the valuation bubble does pop, the S&P 500 and its components very well could be hit harder than many other blue-chip stocks outside the index. If you only have a few years left in your investment horizon, you should acknowledge this and invest (and monitor) accordingly. If your investment horizon is measured in decades, buy and never look back.Learn more about iShares' IVV here iShares Core S&P Mid-Cap ETF (IJH)Type: Mid-Cap Equity Expenses: 0.07%As I just said, it's difficult to beat the market. But the iShares Core S&P Mid-Cap ETF (NYSEARCA:IJH) is awfully, awfully darn good at it. From a total performance perspective, the IJH has beaten the IVV over a 15-year period.Source: Rachel Kramer via FlickrAnd yet, very few people talk about the IJH as , just as very few people talk about the companies that make it tick, such as veterinary supplier Idexx Laboratories, Inc. (NASDAQ:IDXX) and plant-based food and beverage producer WhiteWave Foods Co (NYSE:WWAV).So … what's the deal?Mid-cap companies are frequently referred to as the market's "sweet spot." That's because, as Hennessy Funds describes in a recent whitepaper (PDF), they typically feature much more robust long-term growth potential than their large-cap brethren, but more financial stability, access to capital and managerial experience than their small-cap counterparts. * 10 Stocks to Buy That Wall Street Expects to Soar for the Rest of 2019 The result:"Using standard deviation as a statistical measure of historical volatility, investors in mid-cap stocks have consistently been rewarded with lower risk relative to small-cap investors over the 1, 3, 5, 10, 15 and 20 years ended December 31, 2015. While mid-caps have historically exhibited higher standard deviation than large-caps, investors were compensated for this higher volatility with higher returns for the 10, 15 and 20 year periods."Ben Johnson, CFA, director of global ETF research for Morningstar, points out that "an investment in a dedicated mid-cap fund reduces the likelihood of overlap with existing large-cap allocations and stands to improve overall portfolio diversification."In other words, IJH is an outstanding fund, but don't consider it an S&P 500 replacement -- consider it an S&P 500 complement.Invest in both.Learn more about IJH here SPDR S&P Bank ETF (KBE)Type: Industry (Banking) Expenses: 0.35%Bank stocks have done very, very well in 2019, with solid year-to-date performances in stocks like Bank of America (NYSE:BAC, +16%) and Citigroup (NYSE:C, +16.7%) leading the broad Financial Select Sector SPDR Fund (NYSEARCA:XLF) to a 12.5% gain since the start of 2019. This makes the SPDR S&P Bank ETF (NYSEARCA:KBE) especially attractive.Source: Mike Mozart via FlickrSince Donald Trump's election, the KBE has gained just shy of 20% on the belief Trump will tear down Wall Street regulations, creating an environment that's much more conducive to bank profits.That was confirmed in late 2016, when Trump confirmed Steve Mnuchin as his pick for Treasury Department secretary, and Mnuchin was quick to say that "(stripping) back parts of Dodd-Frank that prevent banks from lending" was top on his list of priorities.Mnuchin said something else telling -- namely, that regional banks were the "engine of growth to small- and medium-sized businesses." I got a call from Chris Johnson of JRG Investment Group after that, and he quipped, "It's like he stared into the camera and winked at every regional bank and said, 'You're going to make money again.'"While XLF does hold banks, it also holds insurers and other types of financials. KBE is a more focused collection of more than 60 banks, including national brands like Bank of America to smaller regionals like Montana-based Glacier Bancorp, Inc. (NASDAQ:GBCI), which is less than $3 billion by market cap. These stocks will not only benefit from any anti-regulation action but also future interest rate hikes.Learn more about SPDR's KBE here PowerShares Aerospace & Defense Portfolio (PPA)Type: Sector (Defense) Expenses: 0.64%Another Trump play worth the while is defense stocks. Yes, most pundits thought defense plays would do well under either Clinton or Trump, but the consensus seems to see the president-elect as the more defense-friendly choice.Source: Shutterstock The PowerShares Aerospace & Defense Portfolio (NYSEARCA:PPA) is one of two ideal ways to play the defense space broadly. The other is the iShares U.S. Aerospace & Defense ETF (NYSEARCA:ITA), and frankly, I think it's a toss-up between the pair. It just depends on what you're looking for.Both are heavy in many of the same stocks, such as Boeing Co (NYSE:BA) and United Technologies Corporation (NYSE:UTX). The price advantage goes to the iShares fund, which is cheaper by 20 basis points. However, PPA is a better choice if you're looking for more diversification slightly less of its weight is in its top 10 holdings than ITA, and it also features 51 holdings to ITA's 37.The PowerShares ETF also hasn't run as hotly as iShares' fund. The ITA is up 41% since the February bottom versus about 38% for PPA, and the former is up just a hair more since the election. * 7 High-Quality Cheap Stocks to Buy With $10 It's a small difference, but an important one. Defense stocks are clobbering the market this year, including more than doubling the S&P 500 since Trump got elected. This isn't a hidden trade. Frankly, I think new money should consider waiting for the next sizable market dip to knock some of the froth off before buying either of these ETFs.But defense will rule for the foreseeable future. Thus, PPA and ITA will too.Learn more about PowerShares' PPA here. Global X SuperDividend Emerging Markets ETF (SDEM)Type: Emerging-Market Dividend Expenses: 0.65%The next four funds are dedicated yield plays, and we're starting with a pretty young (and aggressive) ETF -- the Global X SuperDividend Emerging Markets ETF (NYSEARCA:SDEM). But there are a few sound theories that could make this one of the best international plays.Source: Shutterstock Trump is widely considered to be a net negative for emerging markets because of his anti-trade, pro-U.S. rhetoric. But as Paul J. Lim and Carolyn Bigda at Fortune point out, the recent reactionary drought in EM stocks has brought their price-to-earnings ratios below their long-term average. Plus, if Trump ends up being mostly talk on this front, that fear will abate, taking pressure off emerging markets.The duo points out a number of other drivers, including … * Stimulated U.S. economic growth would benefit emerging markets who export to the West. * Commodity price pressure has eased, helping the many materials plays in EMs. * Higher oil prices should reduce the number of loan defaults in oil and gas, which will lift some of the worries about emerging markets' financial companies.All of that stands to benefit the SDEM, which boasts materials (23%) and financials (15%) as its two heaviest sectors, and invests heavily in commodity-focused markets including Brazil and Russia.SDEM does pose a bit of risk by intentionally investing in some of the highest yielders across a number of emerging markets -- as we all know, dividends can suggest financial stability, but excessively high dividends can be a symptom of troubled companies.But Global X views the high dividends as another factor of value (the reason yields are high is because the stocks are underappreciated), and it does mitigate this risk by equally weighting its 50 holdings upon every rebalancing. So right now, the largest weight in the fund is Indian miner Vedanata Ltd (ADR) (NYSE:VEDL) at just less than 4% of the fund.SDEM's monthly dividend yields 6.39%. That's still excellent for an emerging-markets fund, and the icing on the cake if the potential for an EM rebound is realized.Learn more about SDEM here PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD)Type: U.S. Dividend Expenses: 0.3%If you're looking for dividend stocks without quite so much risk, the PowerShares S&P 500 High Dividend Low Volatility Portfolio (NYSEARCA:SPHD) is literally designed to provide you with just that.Source: Shutterstock The SPHD is another 50-stock portfolio that seeks out dividends, not in risky emerging markets, but in the most stable high-yield blue chips the S&P 500 has to offer. To do this, the index takes the 75 highest-yielding constituents of the index, with a maximum of 10 stocks in any one particular sector, then takes the 50 stocks with the lowest 12-month volatility from the group.The result is a mostly boring group of stocks that are heavy in utilities (17%), industrials (15%) and real estate (13%). What's interesting there is that information technology is a fairly heavyweight at 12% of the fund.The fund also uses a modified market cap-weighting scheme that provides a ton of balance. Even top holdings CME Group (NASDAQ:CME) and General Motors (NYSE:GM) are just barely 3% of the fund apiece. * 7 Stocks to Buy for the Coming Recession The main purpose of a fund like SPHD is to create even returns and strong income -- something more in line of protection against a down market. But it has even managed to clobber SPY (and numerous dividend ETFs) amid a rip-roaring rally.SPHD is young, but it looks like one of the best index funds on the market.Learn more about SPHD here SPDR Bloomberg Barclays High Yield Bond ETF (JNK)Type: Junk Bond Expenses: 0.4%In late 2014, I picked the SPDR Bloomberg Barclays High-Yield Bond ETF (NYSEARCA:JNK) as one of the best index funds to buy for 2015, and JNK responded by dropping 13% that year and recovering to "only" 8% declines this year. On a total return basis, however, JNK has actually returned 5.5%.That reflects the general idea behind buying JNK -- even in difficult times for junk bonds, a heavy yield can do a lot to offset capital losses, and then some.Invesco released a report showing that high-yield bonds like those held in JNK actually perform well in rising-rate environments (PDF). It starts:"Since 1987, there have been 16 quarters where yields on the 5-year Treasury note rose by 70 basis points or more. During 11 of those quarters high yield bonds demonstrated positive returns; during the five quarters where high yield bond returns were not positive, the asset class rebounded the following quarter."There's a number of reasons for this, such as an expanding economy normally being a boon for corporate debt service (lowering default rates), a lower relative duration rate of junk bonds and the boosting of returns via prepayment penalties by companies anxious to reduce or eliminate their debt before rates increase.Meanwhile, near-zero rates have helped keep down the rates on junk bonds, so right now JNK is yielding nearly 6% despite offering some of its lowest nominal payouts since inception in late 2007. Expect that to rise along with interest rates in coming years, which will provide outstanding annual returns from income alone to anyone with a long investment horizon.Learn more about SPDR's JNK here VanEck Vectors Preferred Securities ex Financials ETF (PFXF)Type: Preferred Stock Expenses: 0.41%*Another less-ballyhooed asset geared toward high income is preferred stocks. They're called "preferred" because the dividends on them actually take preference over common stock dividends.Source: Shutterstock Preferreds must be paid before commons are, and in the case of a suspension, many preferred stocks demand that the company pay all missed dividends in arrears before resuming dividends to common shares.And the "stocks" part of the moniker is a little misleading too, because they actually have a lot in common with bonds: * While common stock technically is equity, it typically doesn't include voting rights (like bonds). * Also, rather than a dividend that may fluctuate from payout to payout like a stock, preferreds have one fixed, usually high, payout amount that's assigned when the stock is issued (like bonds). * While common stock technically can register capital gains and losses, they tend to trade close to the par value assigned at issuance, which often is $25. So they might trade at a little discount or a little premium, but they don't fluctuate a lot. In other words: They have low volatility. * 7 Dark Horse Stocks Winning the Race in 2019 While I have long been (and still am) invested in the iShares U.S. Preferred Stock ETF (NYSEARCA:PFF), my recommendation is the VanEck Vectors Preferred Securities ex Financials ETF (NYSEARCA:PFXF).The PFXF was one of a few ex-financials funds that came to life in the wake of the 2007-09 financial crisis and bear market. So it differs mightily from most preferred stock funds which are heavy in banks and other financial stocks. Instead, PFXF is loaded with preferreds from utilities (29%), REITs (28%) and telecoms (15%).But the real draw of PFXF is its low 0.4% expense ratio, tiny beta of 0.2 and 5.9% yield -- the best combination of the three in the space.*Includes an 8-basis-point fee waiverLearn more about VanEck's PFXF here The Best Index Funds to Buy: Direxion Daily S&P Biotech Bull 3x Shares (LABU)Type: Leveraged Industry (Biotech) Expenses: 0.95%*But while I'm long both pharmaceuticals via the Health Care Select Sector SPDR Fund (NYSEARCA:XLV) and biotechs via the SPDR S&P Biotech ETF (NYSEARCA:XBI), I think the best healthcare opportunity will be found by traders who tango with the Direxion Daily S&P Biotech Bull 3x Shares (NYSEARCA:LABU).The LABU is a 3x leveraged index fund that aims to provide triple the daily returns of the S&P Biotechnology Select Industry Index -- the same index the XBI is based off. Note the term "daily returns" -- the longer you hold onto leveraged funds, the more your returns can skew from the movement of the index. But, if you're simply looking to make a trade over the course of a few days or even a couple of weeks, LABU can rip off insane returns, such as the 33% it returned in just the first day after Clinton was defeated.I think biotechs could still be in for a bumpy ride, as popular outcry over sky-high drug pricing isn't going away. Moreover, there's still the issue of pharmacy benefits managers (PBMs) increasingly siphoning pharmaceutical and biotechs' profits. But aggressive traders will get the most bang for their buck trying to play dips with tools like LABU, while fiscal hermit crabs like myself are content to sit in XBI and enjoy the uneven crawl higher.*Includes 12-basis-point fee waiver.Learn more about Direxion's LABU here Direxion Daily Gold Miners Index Bull and Bear 3x Shares (NUGT/DUST)Type: Leveraged Industry (Gold Mining) Expenses: 0.94%/0.95%*The last of the best index funds are actually a pair of funds that you can use to trade gold. (Sort of.)Source: Shutterstock The Direxion Daily Gold Miners Index Bull 3x Shares (NYSEARCA:NUGT) and Direxion Daily Gold Miners Index Bear 3x Shares (NYSEARCA:DUST) are actually leveraged plays on the NYSE Arca Gold Miners Index -- an index of gold mining companies that powers the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX).Why gold miners?Gold miners have certain all-in costs of mining gold, and so they move heavily based on the price of the commodity. In fact, they tend to be more volatile than gold itself. Just take the first half of 2016, in which the SPDR Gold Trust (ETF) (NYSEARCA:GLD) returned a robust 25%. GDX doubled in that same time frame. And NUGT? NUGT returned 420% -- so, more than quadruple the GDX. * 7 S&P 500 Dividend Stocks to Buy at Least Yielding 3% But if you timed the play wrong, you were sunk. If you bought NUGT in May and held through the end of the month, you were down 40% to GDX's 14%.I have no doubt that 2019 will [continue to] provide a number of big drivers (in either direction) for gold, from U.S. dollar movements to interest rate hikes to renewed Brexit fears. NUGT and DUST are two lucrative ways to profit off those trends.Just handle with care.*Includes a 9-basis-point fee waiver for NUGT and a 2-basis-point fee waiver for DUST.Learn more about NUGT & DUST hereAs of this writing, Kyle Woodley did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Apple Should Consider Buying * 7 Beaten-Up Housing Stocks Due for a Bounce Back * Take Buffett's Advice: 5 Vanguard Funds to Buy Compare Brokers The post The 10 Best Index Funds to Buy and Hold appeared first on InvestorPlace.
If you're new to investing, one of the best ways you can dip your toe into the water is to buy a mutual fund or exchange-traded fund (ETF) that invests in all 505 of the S&P 500's stocks. Your first question: What is the S&P 500? Your second question: How come there are 505 stocks, not 500? Both are relatively painless questions to answer.First, the S&P 500 represents 500 of the largest and most established companies listed on a U.S. stock exchange. You're likely familiar with many of the index's constituents. InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe S&P 500's largest company by market capitalization [share price multiplied by number of shares outstanding] is Microsoft (NASDAQ:MSFT) at $1.02 trillion. Warren Buffett, one of the most successful investors of all time, has said that most investors should simplify their investments to deliver better long-term returns. He put it this way in his 2013 annual letter to shareholders:"My advice [to the trustee] couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) …I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions or individuals -- who employ high-fee managers."Low costs and few moving parts wins the game in the long run.The second question requires much less legwork. There are 505 stocks in the index because some of the companies, such as Buffett's Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), have more than one class of shares, which means Berkshire Hathaway counts as two holdings, not one.Simple, right? * 7 Stocks to Buy As They Hit 52-Week Lows Now that I've answered the two questions, I better cut to the chase by providing readers with a short list of easy ways to buy S&P 500 stocks. Option No. 1: The SPDR S&P 500 ETF (SPY)The oldest ETF in the U.S. -- launched in 1993 -- is the SPDR S&P 500 ETF (NYSEARCA:SPY). It also happens to be the biggest with $260 billion in assets. As you probably expected, it has 500 holdings, but you may be surprised to hear that the SPY ETF currently pays you a dividend yield of 1.9% to hold it. And that's all for the expense ratio of 0.09%, or $9 per $10,000 invested per year.However, remember what Buffett said about low-cost funds. It's not the cheapest of the ETFs tracking the S&P 500, but it is the most popular. And it has stood the test of time. Option No. 2: Vanguard S&P 500 ETF (VOO)Source: Shutterstock Two of the next three largest U.S.-listed ETFs also invest in every one of the S&P 500 stocks -- the Vanguard S&P 500 ETF (NYSEARCA:VOO) has $110 billion in assets and charges 0.03%. This used to be 0.04%, until Vanguard cut the fees on three of its most popular products -- including the VOO ETF.As Vanguard's literature points out, this fund is "more appropriate for long-term goals where your money's growth is essential." It makes a great base holding. * 7 S&P 500 Dividend Stocks to Buy at Least Yielding 3% Clocking in at the VOO ETF's old expense ratio of 0.04% is the iShares Core S&P 500 ETF (NYSEARCA:IVV) with $178 billion in assets. These each give you plenty of choice when it comes to capturing a significant portion of American equities. Option No. 3 - Buy Buffett's Stock (BRK.B)Source: Shutterstock Berkshire Hathaway has often been compared to a very large mutual fund because it owns $203 billion worth of publicly traded stocks, most of them part of the S&P 500.However, in addition to the equities, you get a small piece of hundreds of private companies operating in all kinds of different sectors of the economy. The best part: Buffett won't charge you annual fees to own his fund. He'll just deliver long-term returns that handily beat the S&P 500. From 1965 to 2017, Berkshire Hathaway stock's generated a compound annual growth rate of 20.5%, more than double the S&P 500. As Warren Buffett suggests, you ought to do it early and often and at the lowest cost possible.These three options plus mutual funds that track the S&P 500 index (they're slightly more expensive than ETFs) will get the job done while letting you sleep easier at night. As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * Should You Buy, Sell, Or Hold These 7 Medical Cannabis Stocks? * 7 Strong Buy Stocks With Over 20% Upside * 7 Reasons Stock Buybacks Should Be Illegal Compare Brokers The post 3 Different Ways for Newcomers to Buy S&P 500 Stocks appeared first on InvestorPlace.
Zacks Market Edge Highlights: Pfizer, Vanguard S&P 500 ETF, Global X Social Media ETF, Kraneshares China Internet ETF and Microsoft
When it comes to building a portfolio, Vanguard ETFs and funds are often the top draws for investors. And there's a good reason for that. The firm and investment pioneer John Bogle created the idea of the index fund back in the 1970s. Moreover, the asset manager's philosophy stems from low-cost investing. So, naturally, Vanguard ETFs are some of the least expensive funds to own. When putting all the pieces together, it becomes really easy to see why Vanguard ETFs have attracted billions of dollars' worth of assets from investors both big and small.The question is which Vanguard funds make sense for you?The firm has a line-up of 80 different ETFs and the bulk of those offerings can be a bit heavy. For example, the Vanguard S&P 500 ETF (NYSEArca:VOO) holds more than $106 billion in assets, while the Vanguard FTSE Emerging Markets ETF (NYSEArca:VWO) holds roughly $62 billion. As a result, just a few Vanguard ETFs get most of the press. That's a shame as the firm's low-cost and index-hugging mantra extends to the rest of its ETF line-up as well.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * The 10 Biggest Announcements From Apple WWDC 2019 With that, here are three wonderful, but commonly overlooked Vanguard ETFs that should be right at home in your portfolio. Vanguard Extended Market ETF (VXF)Source: Shutterstock Over the long haul, small- and mid-cap stocks have long outperformed their bigger counterparts. However, most investors still remain woefully underweight smaller stocks and finding successful individual winners here can be incredibly difficult. This is where Vanguard ETFs can come to the rescue.The Vanguard Extended Market ETF (NYSEARCA:VXF) allows investors to tap into both small- and mid-cap stocks at the same time with one ticker. VXF tracks the S&P Completion Index. As the name implies, the fund owns everything that isn't in the large-cap focused S&P 500. And we're talking literally everything. VXF currently holds more than 3,260 different small- and mid-cap stocks. When you combine the fund with large-cap holdings, you basically have the U.S. stock market covered. The best part is, by using this ETF, the volatility and single-company risks are minimized to almost zero. With it, investors can instantly overweight the economies real growth engines.It turns out this is a powerful thing to do.When it comes to Vanguard ETFs, VXF has been a top performer. Over the last ten years, the fund has averaged a 16.61% annual total return. That's not too shabby by any means. And as a Vanguard fund, VXF is pretty cheap to own. Expenses for the ETF clock in at just 0.07%- or just $7 per $10,000 invested.In the end, VXF does everything a Vanguard ETF should do. That's broad indexing a rock-bottom price. Vanguard Mortgage-Backed Securities ETF (VMBS)Source: Grab Media When it comes to bonds, Treasury securities are often the first stop for investors and there are plenty of Vanguard ETFs looking at these. However, there is a way to get a slightly higher yield and still keep that government guarantee. We're talking about mortgage-back securities or MBS bonds.Mortgage-backed securities are bonds secured by home and other real estate loans. There are all different flavors of these, but the vast bulk of them are residential-focused and issued by federal government agencies like Ginnie Mae (GNMA) or government sponsored-enterprises Fannie Mae (FNMA), or Freddie Mac (FHLMC). Moreover, MBS bonds typically pay slightly more than comparable Treasury bonds thanks to the higher risk that you or I could default on our mortgages or pay them back earlier. However, GNMA bonds are backed by the full faith and credit of the U.S. government, while the recession taught us that the government will bail out Freddie and Fannie when the water's get rough.With that, the Vanguard Mortgage-Backed Securities ETF (NYSEARCA:VMBS) could be a good bet for investors looking for a bit more. VMBS tracks Bloomberg Barclays U.S. Mortgage-Backed Securities Float Adjusted Index -- which only focuses on U.S. agency mortgage bonds. None of the funny stuff. As a result, the ETF has been pretty steadfast since inception and yields a healthy 3.02%. * The 10 Best Stocks for 2019 -- So Far By using the Vanguard ETF, investors can get access to an esoteric asset class for a cheap 0.07% in expenses. Vanguard International Dividend Appreciation ETF (VIGI)Source: Shutterstock With $34 billion in assets, the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) is a star player among Vanguard ETFs. VIG follows those stocks that have long histories of increasing their dividends every year. This strategy provides a way for investors to grow their income potential and provides with great long-term returns.But it's not U.S. stocks that benefit from growing dividends, international ones also win here.Which is why the smaller and often ignored Vanguard International Dividend Appreciation ETF (NYSEARCA:VIGI) can be a great compliment to the more popular VIG.VIGI also tracks a basket of large-cap stocks that have increased their dividends consistently over the last seven years. This time, the ETF combs both non-U.S. developed and emerging markets to find its dividend champions -- currently at a 75%/25% spilt between developed and emerging market stocks. The top 400 stocks are included in the index.This provides a way for investors to not only score some much-needed international exposure but also income growth as well. Currently, VIGI yields about 1.89%. However, that yield could be worth even more over the long haul. As foreign currencies fluctuate against the U.S. dollar, a drop in the dollar would boost the Vanguard ETFs underlying yield, as weaker local currencies convert into the stronger dollar.All in all, VIGI should belong in your portfolio just as much as VIG. Expenses run a cheap 0.25%.Disclosure: At the time of writing, Aaron Levitt did not hold a position in any of the ETFs mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Retailers Including Disney Agree to Ditch On-Call Scheduling * The 10 Best Stocks for 2019 -- So Far * 7 Small-Cap ETFs to Buy Now Compare Brokers The post 3 Wonderful, But Ignored Vanguard ETFs appeared first on InvestorPlace.
Warren Buffett spent a good deal of time at Berkshire Hathaway's (NYSE:BRK.A, NYSE:BRK.B) annual meeting in early May defending the company. Acknowledging that Berkshire Hathaway stock has underperformed the S&P 500 over the past decade, the Oracle of Omaha suggested that past performance doesn't mean that it won't do well in the future. It's a bit of a leap of faith to trust Buffett and his sidekick, Charlie Munger, but if you've owned BRK.B stock for a long time, that's what you've done.There's no doubt Buffett's made mistakes over the 53-plus years he's run the company, but at the end of the day, he's created several billionaires over the years including himself, so you're not going to hear those people complaining about his lack of performance. InvestorPlace - Stock Market News, Stock Advice & Trading TipsNot in a million years. To suggest that Buffett should do this or that to tweak Berkshire so that it can deliver better performance has become a sport all of its own. We all have ideas we think will be just the tonic for Berkshire Hathaway stock. * The 10 Best Stocks for 2019 -- So Far Here are seven I think would help BRK.B end its losing streak. They are in no particular order of urgency or likelihood. Special DividendSource: Shutterstock Investors have been clamoring for Berkshire Hathaway stock to pay a dividend for as long as I can remember. Unfortunately, Warren Buffett prefers to be paid dividends rather than the other way around. It's hard to argue with his logic. In 2018, Berkshire raked in $3.8 billion in dividends from its equity holdings, almost 80% from its five-largest holdings. At a 5% interest rate, BRK.B could borrow $76 billion for future acquisitions using its dividends for annual interest payments.So, there's plenty of evidence that the company's equity portfolio is doing a good job generating passive income for the company. As for a regular dividend, Buffett would prefer not to get locked into some quarterly arrangement. He prefers to use the money for growth. However, as my InvestorPlace colleague Aaron Levitt recently wrote, a special dividend would reward long-time shareholders and use up some of its $114 billion in cash. In Europe, they figure out how much dividend to pay at the end of the fiscal year. Berkshire Hathaway stock could do the same based on some formula that takes into account the amount it's repurchased over the past year and the length of ownership. Increase Share RepurchasesSource: Shutterstock I've never been a fan of share repurchases because it's my experience that most companies overpay for their stock. Recently, a report came out from Ned Davis Research that shows the S&P 500 would have been 500 points lower at the end of the first quarter of 2019, if not for share repurchases. Over the last eight years, the bull market has largely been sustained by buybacks, as share repurchases over that period equaled $3.5 trillion. In the past year, Buffett's lowered his price of admission for making share repurchases. In Q1 2019, it repurchased $1.7 billion of Berkshire Hathaway stock. He's on record stating that he'd spend $100 billion buying back its stock in the future if he thought Berkshire could get a reasonable price. I hope he does, but only when the market tanks and no one else has any money to buy back their stock. And here's another thing. * 3 All-American ETFs to Consider Buying If buybacks have had such a significant effect on stock prices, the fact BRK.B has done very little of its own share repurchases over the past eight years suggests its performance isn't nearly as bad as everyone thinks. Sell McLane CompanySource: Shutterstock This isn't an new thought on my part. I first suggested Buffett sell McLane Company, Berkshire's food and beverage wholesale distributor, in 2013. "For the first nine months of 2013, the food and beverage wholesale distributor generated 26% of BRK.B's overall revenue, but just 2.1% of the company's earnings before taxes," I wrote in November 2013. "While I understand the wholesale distribution business is high-volume, low-margin, it generates a worse yield (1.1% earnings before taxes margin) than Walmart's (NYSE:WMT) dividend yield of 2.4%."How is it doing today?In 2018, McLane Company accounted for 20% of Berkshire's overall revenue while its pre-tax earnings were just 6.1% of the company's pre-tax operating profit and they were only that high because BRK.B had $22.7 billion in net unrealized losses from its equity holdings. Berkshire originally acquired McLane Company from Walmart in 2003 for $1.5 billion. I'm sure it could find a buyer for the firm. Do a SpinoffSource: Shutterstock One of the problems Berkshire Hathaway stock faces today is that potential acquisitions know that the company is trying to bag the elephant. As a result, the price asked moves higher, knowing that Buffett wants to make a big acquisition and has the money to do so. Once upon a time, companies came to Berkshire wanting to be acquired regardless of the price. Now, it appears that acquisition prices have gotten so out of hand; potential acquisitions are asking the world. In the past two years, BRK.B made a total of $6.0 billion in acquisitions. In 2016, that number was five times higher due to the Precision Castparts acquisition. Acquisitions are few and far between. To speed this process up, I suggested in 2018, that Berkshire spinoff some of its excess cash and McLane Company. "It might be wiser for Buffett to spin off $30 billion of the excess cash plus McLane Company, its wholesale distribution business," I wrote in August 2017. "The separately traded company would be run by his chosen (but yet unnamed) successor, which would allow it to begin succession planning while buying some smaller businesses that might not fit the Berkshire Hathaway M&A criteria." * 6 Stocks to Buy That Are Bucking the Retail Selloff Today, I think it still makes sense, but I'd sell McLane Company after completing the spinoff. Think of it as a kind of special dividend. Buy Some Smaller CompaniesSource: Shutterstock In some ways, Berkshire Hathaway stock is like a large mutual fund. In other ways, it's similar to private equity in that it makes a big acquisition in a particular industry and then uses that company as a platform for growth -- both organically and through bolt-on transactions. Right now, BRK.B has seven platforms for growth: insurance, railroads, energy, manufacturing, service and retail, and financial services. The $6 billion in acquisitions over the last two years were of the bolt-on variety. This suggestion works better if Berkshire follows through on my previous proposal to spinoff some cash into a smaller business that can go after little fish. Until that happens, I'm not sure $6 billion is ever going to be enough for investors. Buy the S&P 500Source: Shutterstock At the annual shareholders meeting in Omaha in early May, an investor pointed out to Buffett that if he'd taken Berkshire Hathaway stock's cash and T-bills over the past 15 years -- keeping Buffett's often-quoted $20-billion cushion -- and invested in an index like the S&P 500, the company would have $43 billion in additional cash and a book value that's 12% higher. Buffett's long argued that regular investors ought to buy a low-cost S&P 500 index fund along with a short-term bond fund. So, while he likes to have cash in order to make his now famous "preferred share" deals -- the most recent being a $10 billion investment in Occidental Petroleum (NYSE:OXY) -- I'm sure he could put $60 billion in the Vanguard S&P 500 ETF (NYSEARCA:VOO) and still have plenty of financial flexibility for making these kinds of deals or pulling the trigger on a big acquisition. * 3 Small-Cap Stocks to Buy After all, if you can't beat them, join them. Acquire Brookfield Asset ManagementSource: Governor Earl Ray Tomblin via FlickrThis last one is my personal favorite. Although Buffett has said that he's already chosen his successor, I'd like him to consider Bruce Flatt and Brookfield Asset Management (NYSE:BAM) as a possible alternative. Up until the past couple of years, Flatt flew under the radar of most investors. However, Brookfield's announcement that it had purchased 62% of Oaktree Capital Management (NYSE:OAK) in March for $4.8 billion, surely opened a lot of eyes. Flatt is only 54, the perfect age for someone taking over the Berkshire operation. Furthermore, he understands the Berkshire model; Brookfield runs several asset management platforms including infrastructure, real estate, private equity, and now with Oaktree, it's got a distressed debt and credit business. Brookfield's current market value is $46 billion. Let's assume Berkshire would have to pay a 50% premium. That puts the deal at almost $70 billion, well within the company's means.More importantly, it gives Berkshire Hathaway stock one heck of a leader for the next 10-15 years. It won't happen because Buffett doesn't chase deals. But if he did, this would be ideal. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 6 Retailers Including Disney Agree to Ditch On-Call Scheduling * The 10 Best Stocks for 2019 -- So Far * 7 Small-Cap ETFs to Buy Now Compare Brokers The post 7 Ways to Make Berkshire Hathaway Stock More Attractive appeared first on InvestorPlace.
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Warren Buffett says, "All you have to do is just buy a cross-section of America and then never listen to people like me or read the papers or do anything subsequently."
With the new tax law changes all but wiping out itemized deductions, filers are looking for any ways they can to catch a break. Account holders over the age of 70 1/2 are subject to RMDs — required minimum distributions — which is the amount they’re obligated to withdraw from their tax-deferred retirement accounts and pay taxes on. “The government wants its money back,” retirement expert Ed Slott tells Yahoo Finance.
Vanguard is the best-known pioneer of low-cost investing, including in the exchange-traded fund space. But it's hardly alone anymore, as providers such as Schwab, iShares and SPDR have all hacked away at each other with ever-shrinking fees.Still, don't sleep on Vanguard ETFs. While Vanguard isn't always No. 1 among the cheapest index funds in every class, it's still a low-cost leader in several areas, and it's typically one of the least expensive options no matter where you look.And inexpensive does matter. Let's say an investor puts $100,000 apiece in two different funds that both gain 8% annually, but Fund A charges 1% in fees while Fund B charges 0.5%. In 30 years, Fund A will be worth a respectable $744,335 ... but Fund B will be worth $865,775. That's roughly $120,000 lost not just in fees, but also lost opportunity cost from returns that could have been reinvested in the fund.Here are eight low-cost Vanguard ETFs that investors can use as part of a core portfolio. All of these index funds are among the least expensive in their class and offer wide exposure to their respective market areas. SEE ALSO: The 19 Best ETFs for a Prosperous 2019
With few exceptions, most Exchange Traded Funds (ETFs) have done very well so far in 2019. For investors who took advantage of the opportunity in ETFs that follow the S&P 500 or similar large-cap stock indexes, this has rung especially true. From the beginning of the year through the market close on April 23rd, the S&P 500 has risen nearly 17%.
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