After initially plunging on President Trump’s tariff plan last month, the S&P 500 rallied and fully recovered all of the losses suffered since April 2. The broad-based index closed out last week with a nine-day winning streak, its best showing in over a decade.
That sort of volatility can have investors scrambling to find a safe haven to put their money to work in the market. One of the best places they can seek shelter is with exchange-traded funds (ETFs), which offer instant diversification, often across hundreds of stocks, industries, and even geographies, which reduces the risk of individual stock failures.
24/7 Wall St. Insights:
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“Sell in May and go away” is an investing maxim that points to the market’s historic underperformance in the summer.
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That misses out on a lot of opportunities available, particularly during periods of market volatility like we’re experiencing now.
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Vanguard ETFs can smooth out the rough waters due to their low cost, tax efficiency, and focus on quality.
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Vanguard is a giant in the ETF world, providing investors with a myriad of funds to navigate market turbulence. The money manager’s ETFs span various asset classes, including U.S. and international equities and bonds, allowing investors to balance risk and reward.
Vanguard’s reputation for reliability and a history of top ratings means the ETFs provide stability and cost-effective exposure, making them a prudent choice for weathering today’s economic uncertainty. Moreover, their low expense ratios ensures investors keep more of their returns compared to higher-cost funds, while their tax efficiency, due to low turnover, minimizes capital gains distributions, a benefit in volatile markets.
Below are two of the best Vanguard ETFs you should load up in May to make sailing through this period of uncertainty a smooth process.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (NYSEARCA:VYM) stands out as an ETF to load up on amid a turbulent market.Tracking the performance of the FTSE High Dividend Yield Index, VYM offers a 2.7% yield, doubles that of the S&P 500’s 1.3%, providing reliable income when returns are uncertain. The 589 stocks in its portfolio, including giants like JPMorgan Chase (NYSE:JPM) and Johnson & Johnson (NYSE:JNJ), diversify across sectors such as financials and healthcare, reducing risk in volatile conditions.
Financials comprise over 14% of its holdings, while healthcare accounts for another 14% and industrial, 13%. VYM’s 10-year annualized return of 9.4% outperforms its category’s 6.86%, showing its resilience.
With an expense ratio of just 0.06%, investors have more of their money working for them. Also, Its tax efficiency — 85% of Vanguard ETFs have no capital gains distributions — adds further value, and for investors seeking income and stability in May’s uncertain market, VYM is a top choice to buy.
Vanguard Dividend Appreciation Index Fund ETF (VIG)
The second Vanguard ETF to consider loading up on in May is the Vanguard Dividend Appreciation Index Fund ETF (NYSEARCA:VIG).
VIG tracks the NASDAQ U.S. Dividend Achievers Select Index, focusing on some 338 companies with at least 10 years of consecutive dividend increases. While financials and healthcare stocks also comprise some of its biggest sector exposure, tech stocks like Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) also account for 22% of the portfolio.
This focus on quality ensures stability, as VIG’s holdings span resilient sectors and offer a 1.8% yield, with an impressive 8% average annual dividend growth over the past decade. Its 10-year annualized return of 11.2% outperforms its category’s 6.6%, showcasing long-term growth potential even in volatile markets.
With an expense ratio of just 0.05%, VIG ensures investors keep more of their returns for themselves, a critical benefit when market returns are pressured. The ETF’s focus on dividend growth rather than high yield makes it ideal for long-term investors seeking to outpace inflation while maintaining stability.
In a tariff-heavy market with declining earnings expected, VIG’s quality holdings and cost efficiency make it a top choice to load up on for investors aiming to weather May’s economic challenges with growth and income.
The post 2 Vanguard ETFs To Load Up on In May appeared first on 24/7 Wall St..
