In this article, we will take a look at 11 of the best stocks in Vanguard’s top ETF to buy. If you want to see more of the best stocks in Vanguard’s top ETF, go directly to 5 Best Vanguard Stocks to Buy Now.
Founded by Jack Bogle in 1975, Vanguard is one of the world’s largest investment management companies with assets under management of $8.1 trillion in 2022 according to Statista. Given it popularity, Vanguard has over 30 million investors as of 9/30/2022 and also 18,800 employees.
As a private company, Vanguard has been one of the fastest growing asset managers in the last decade in terms of total assets. The company, in fact, had the designation of the fastest growing asset manager in the world for seven straight years up to 2018. While Vanguard had assets under management of $991.9 billion in 2005, the company had assets under management of $7.3 trillion in 2021 and $8.1 trillion in 2022 thanks to its strong growth.
In terms of its offerings, Vanguard offers a broad selection of investments, retirement services, and also advice to investors and institutions alike. As of 9/30/22, Vanguard also offers 412 funds worldwide with arguably its most popular fund being the ETF, Vanguard Total Stock Market ETF (VTI).
The Vanguard Total Stock Market ETF (VTI) is an ETF that,
“seeks to track the investment performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq. The fund invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full Index in terms of key characteristics. These key characteristics include industry weightings and market capitalization, as well as certain financial measures such as price/earnings ratio and dividend yield.”
According to the company, The Vanguard Total Stock Market ETF (VTI)’s total net assets were $1.1 trillion as of 9/30/22.
Given the ETF’s huge size, we consider the most popular stocks in the The Vanguard Total Stock Market ETF (VTI), ‘Vanguard Stocks’ for this article.
Given its huge size, the ETF has economies of scale and lower expenses as a percentage of assets as a result. In terms of its expense ratio, The Vanguard Total Stock Market ETF (VTI) has an expense ratio of 0.03% versus the average expense ratio of similar funds of 0.79%.
Given the growth in the U.S. economy in the last 10 years, The Vanguard Total Stock Market ETF (VTI) has also performed pretty well in the last decade.
In the last 10 years, the ETF has averaged an annual return of 11.34% as of 9/30/22. Since its inception in 5/24/2001, the ETF has averaged an annual return of 7.27% as of 9/30/22.
2022
Due to the Federal Reserve having increased interest rates 5 times in 2022 alone, the major indexes have all fallen fairly substantially this year.
As a result, the Vanguard Total Stock Market ETF’s net asset value has fallen 19.69% as of 10/26/22. With more interest rate increases likely and a recession also potentially occurring by the end of 2023, the market faces more headwinds and the Vanguard Total Stock Market ETF could potentially fall further in the near term.
Nevertheless, given how diversified the Vanguard Total Stock Market ETF is and also given the ETF’s stock selection and weighting criteria, the Vanguard Total Stock Market ETF is arguably one of the best investments for long term investors.
In terms of individual stocks mentioned in this article, each stock is arguably riskier than the Vanguard Total Stock Market ETF given they are less diversified. Given the uncertain times, it could be a good idea for investors to own a well diversified portfolio of many different stocks across many different sectors.
In terms of stocks of unique companies in Vanguard’s most popular ETF, here are 11 of the largest ones:
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Methodology
For the 11 Best Vanguard Stocks to Buy Now, we selected the top 11 weighted stocks from the Vanguard Total Stock Market ETF (VTI)’s holdings as of 9/30/22. We excluded Alphabet Inc. Class A because Alphabet Inc. Class C already makes it to the top 11 as well.
11 Best Vanguard Stocks to Buy Now
11. JPMorgan Chase & Co. (NYSE:JPM)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 0.85%
Number of Hedge Fund Holders: 104
While higher interest rates have helped JPMorgan Chase & Co. (NYSE:JPM)’s consumer banking business to an extent, the banking giant nevertheless faces headwinds given its capital market and corporate business. With many big tech companies recently missing earnings substantially, corporations could potentially cut back on spending in the next year. As one of the strongest banks, JPMorgan Chase & Co. (NYSE:JPM) is nevertheless well positioned in the long term. With a weight of 0.85%, JPMorgan Chase & Co. (NYSE:JPM) ranks #11 on our list of 11 Best Vanguard Stocks to Buy Now.
Alongside Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), JPMorgan Chase & Co. (NYSE:JPM) is a stock that Vanguard Total Stock Market ETF (VTI) has substantial shares in as of the second quarter.
10. Meta Platforms, Inc. (NASDAQ:META)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 0.86%
Number of Hedge Fund Holders: 184
Meta Platforms, Inc. (NASDAQ:META) closed below $100 per share on Thursday after the company’s third quarter missed expectations and the company also issued weak guidance for the fourth quarter. Competition from TikTok and Meta Platforms, Inc. (NASDAQ:META)’s substantial spending on the metaverse have been headwinds. Not helping matters is that Elon Musk is now officially in charge of Meta Platforms, Inc. (NASDAQ:META)’s competitor, Twitter. Nevertheless, Meta Platforms, Inc. (NASDAQ:META) has substantial earnings power if Mark Zuckerberg focuses on his core business and keeps the company’s market share in social media.
9. Exxon Mobil Corporation (NYSE:XOM)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 1.01%
Number of Hedge Fund Holders: 72
Given that it gets most of its profits from oil and gas, Exxon Mobil Corporation (NYSE:XOM) is arguably riskier than some other stocks on this list if oil and gas prices decline. In the long term, Exxon Mobil Corporation (NYSE:XOM) will also need to transition into a greener future if it wants to keep growing its profits. Although that might be pretty difficult, Exxon Mobil Corporation (NYSE:XOM) has substantial capital for M&A given its market cap of $440 billion. As of 9/30, Exxon Mobil Corporation (NYSE:XOM) also accounted for 1.01% of Vanguard Total Stock Market ETF (VTI).
8. Johnson & Johnson (NYSE:JNJ)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 1.19%
Number of Hedge Fund Holders: 83
Unlike the S&P 500 which has fallen 20.6% year to date, Johnson & Johnson (NYSE:JNJ) shares are actually up 0.72% as of 10/27. Despite macro pressures such as a strong U.S. dollar which makes Johnson & Johnson (NYSE:JNJ)’s international earnings less in dollar terms, the company reported strong third quarter results with 8.2% organic sales growth. Adjusted EPS also exceeded the consensus by 2%. As of 9/30, Johnson & Johnson (NYSE:JNJ) accounted for 1.19% of the Vanguard Total Stock Market ETF (VTI).
7. Berkshire Hathaway Inc. (NYSE:BRK-B)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 1.25%
Number of Hedge Fund Holders: 109
Although the market is substantially lower this year, Berkshire Hathaway Inc. (NYSE:BRK-B) shares have only declined 3% year to date given rising interest rates have helped the company’s large insurance business. Berkshire Hathaway Inc. (NYSE:BRK-B) has also benefited from other factors including strong second quarter results where operating profits rose 22% when excluding foreign exchange gains. In the long term, Berkshire Hathaway Inc. (NYSE:BRK-B) looks attractive given the company’s competitive advantages and expected future U.S. economic growth.
6. UnitedHealth Group Inc. (NYSE:UNH)
% of Vanguard Total Stock Market ETF (VTI) as of 9/30: 1.31%
Number of Hedge Fund Holders: 91
UnitedHealth Group Inc. (NYSE:UNH) stock is up 7.9% year to date and the stock is near an all time high as the health insurance giant continues to benefit from membership growth as well as value based arrangements. For Q3, UnitedHealth Group Inc. (NYSE:UNH) reported EPS of $5.79 and revenue of $80.89 billion, versus the consensus of $5.42 and $80.5 billion. As a result of its strong businesses and history of growth, UnitedHealth Group Inc. (NYSE:UNH) has a market cap of almost $500 billion as of 10/27 and its stock accounts for 1.31% of the Vanguard Total Stock Market ETF (VTI).
Like UnitedHealth Group Inc. (NYSE:UNH), Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) are also stocks that Vanguard Total Stock Market ETF (VTI) has substantial shares in as of Q2 2022.
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Disclosure: None. 11 Best Vanguard Stocks to Buy Now is originally published on Insider Monkey.
