In this article, we discuss 5 best ETFs to invest in for the long-term. If you want to take a look at more exchange traded funds in this list, click 10 Best ETFs to Invest In For Long Term.
5. Vanguard High Dividend Yield Index Fund (NYSE:VYM)
Vanguard High Dividend Yield Index Fund (NYSE:VYM) tracks the performance of the FTSE High Dividend Yield Index, which measures the investment return of companies delivering high dividend yields. The fund follows a passively managed, full-replication approach, with an expense ratio of 0.06%. At the end of April, Vanguard High Dividend Yield Index Fund (NYSE:VYM) held 443 stocks, with the top 10 holdings comprising 22.60% of the total portfolio. The fund’s net assets stood at $55.8 billion.
One of the most prominent stocks that Vanguard High Dividend Yield Index Fund (NYSE:VYM) invests in is Exxon Mobil Corporation (NYSE:XOM), the Texas-based multinational oil and gas corporation. Exxon Mobil Corporation (NYSE:XOM) is an S&P 500 dividend aristocrat, with an impressive history of consistently increasing dividends for the last 39 years.
Exxon Mobil Corporation (NYSE:XOM) on April 27 declared a $0.88 per share quarterly dividend, in line with previous. The dividend is distributable on June 10, to shareholders of record on May 13. The company delivers a dividend yield of 3.57% as of June 3.
Rajiv Jain’s GQG Partners is the biggest shareholder of the company as of Q1 2022, with 51.80 million shares valued at $4.2 billion. Overall, 83 hedge funds were bullish on the stock at the end of March 2022, up from 71 funds in the prior quarter.
Here is what Goehring & Rozencwajg Associates has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
4. Vanguard Emerging Markets Stock Index Fund (NYSE:VWO)
Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) holds stocks of companies based in global emerging markets, such as China, Brazil, Taiwan, and South Africa. The benchmark for the fund is FTSE Emerging Markets All Cap China A Inclusion Index. It is a long-term investment idea, with high potential for growth, but also high risk. Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) offers an expense ratio of 0.08%, with total net assets exceeding $100 billion and a portfolio comprising 5,446 equities as of April 30.
One of the primary holdings of Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) is Alibaba Group Holding Limited (NYSE:BABA), the Chinese e-commerce giant. On May 31, Truist analyst Youssef Squali raised the price target on Alibaba Group Holding Limited (NYSE:BABA) to $145 from $132 and maintained a Buy rating on the shares. The analyst noted that while the company is not “out of the woods” from macro headwinds, he is more optimistic about Alibaba Group Holding Limited (NYSE:BABA) given the bullish remarks from China’s Vice President about upcoming measures to support the economy, the positive early signs for Chinese audit concessions due to U.S. delisting fears, and the management’s cost efficiency measures to ease Alibaba Group Holding Limited (NYSE:BABA)’s near-term margin pressures.
According to Insider Monkey’s Q1 data, 100 hedge funds placed long bets on Alibaba Group Holding Limited (NYSE:BABA), up from 96 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the leading position in the company, comprising 14.4 million shares worth $1.5 billion.
Here is what Altron Capital Management has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2021 investor letter:
“The negative headlines surrounding Alibaba seemingly have no end and have certainly tested our conviction in this investment over the past half year or so. The company’s latest earnings report brought lower margins, partially because of slowdown in China and partially because of increased investment into its businesses. Alibaba also lowered its guidance for the coming year, adding even more pressure to the share price. Furthermore, the Chinese government’s talk of “common prosperity” and Alibaba’s USD 15.5 billion ‘investment’ toward the cause has not helped turn around short-term sentiment for Alibaba investors. Fellow tech giant Didi has also announced that they would delist from New York, sparking fears that Alibaba may be next. Despite all the negative press, we still maintain our bullish position in Alibaba. While increased government regulation will likely result in lower long-term margins and/or increased effective tax rates, we still believe the current share price drastically undervalues the company. The company’s core commerce business is still growing at double-digit rates, as are its cloud business and international ecommerce platform. The cloud business, once at scale, should provide high-margin growth offsetting some of the negatives of new regulations. With Alibaba currently trading at a low-teens multiple of future earnings, we see no reason to sell even though our estimate of the company’s fair value has certainly decreased since we first purchased shares in the company. The issues surrounding Alibaba are complex and addressing each issue surrounding the company would take up far too much space in these letters than we would like. However, any clients that have concerns about our investment in Alibaba that have not been addressed in previous letters or discussions are encouraged to contact us with your questions.”
3. Invesco S&P 500 Equal Weight ETF (NYSE:RSP)
Invesco S&P 500 Equal Weight ETF (NYSE:RSP) tracks the S&P 500 Equal Weight Index, with all stocks representing approximately the same percentage of the overall portfolio. The fund rebalances its portfolio on a quarterly basis. Invesco S&P 500 Equal Weight ETF (NYSE:RSP) charges a management fee of 0.20% and has a market value of $32.6 billion as of June 2.
A prominent holding of Invesco S&P 500 Equal Weight ETF (NYSE:RSP) is EPAM Systems, Inc. (NYSE:EPAM), a leading American manufacturer of custom software, service development, digital platform engineering, and digital product design. Barclays analyst Ramsey El-Assal on May 9 raised the price target on EPAM Systems, Inc. (NYSE:EPAM) to $410 from $350 and reiterated an Overweight rating on the shares.
According to Insider Monkey’s first quarter database, Cliff Asness’ AQR Capital Management is a leading shareholder of EPAM Systems, Inc. (NYSE:EPAM), with 326,028 shares worth $96.70 million. Overall, 38 hedge funds were bullish on the stock at the conclusion of March 2022.
Here is what Baron FinTech Fund has to say about EPAM Systems, Inc. (NYSE:EPAM) in its Q4 2021 investor letter:
“Outsourced software developer EPAM Systems, Inc. led the group after reporting outstanding quarterly financial results and raising full-year guidance to reflect strong client demand across all market segments.
EPAM Systems, Inc. provides outsourced software development to business customers. Shares rose on quarterly results that beat Street forecasts, with 52% revenue growth and 47% EPS growth. Management raised full-year financial guidance to reflect strong client demand across all market segments, and it expects organic revenue growth to exceed 20% over the long term with upside from accretive acquisitions. We continue to own the stock due to EPAM’s long runway for growth and strong execution.”
2. Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG)
Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG) tracks the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, offering potential tax-efficiency due to low costs. The fund invests in large-cap U.S. securities that are growth oriented. 48% of the fund’s investments are centered on the information technology sector.
Amazon.com, Inc. (NASDAQ:AMZN), one of the Big Five US tech giants, is a significant holding of Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG), representing 6.66% of the total portfolio.
According to the Department of Commerce, despite supply chain and inflationary pressures, US e-commerce sales increased 6.7% year-over-year in Q1 to $231 billion, JPMorgan analyst Doug Anmuth told investors in a research note on June 3. He called Amazon.com, Inc. (NASDAQ:AMZN) his best idea, noting that the company’s revenue growth should also accelerate in the second half of 2022 as comps ease and it wins further share in “key under-penetrated categories” including grocery, consumer packaged goods, apparel and accessories, and furniture/appliances/equipment, contended the analyst.
According to the database of elite funds maintained by Insider Monkey, Amazon.com, Inc. (NASDAQ:AMZN) was part of 271 public hedge fund portfolios in Q1 2022, compared to 279 funds in the earlier quarter. Jaime Sterne’s Skye Global Management is a notable position holder in the company, with 740,500 shares worth $2.4 billion.
Here is what Miller Value Partners Opportunity Equity has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:
“For frame of reference, Amazon (NASDAQ:AMZN) bottomed at the same valuation in the financial crisis (side note: Amazon bottomed at 4x EV/GP after the tech bubble burst)! So there’s historical precedent for the lows being in. We will see whether that holds true this time. Regardless, we think there’s significant upside over a 5-year time horizon. The one other topic I want to briefly address is our volatility. We hope to write something about the topic in more depth in the future, but we want our clients and prospective investors to understand our views on it. We think that volatility is significantly misunderstood. We believe it creates opportunities from which we can profit.”
1. Vanguard 500 Index Fund (NYSE:VOO)
Vanguard 500 Index Fund (NYSE:VOO) invests in the S&P 500 Index, which represents 500 of the leading US companies. The fund aims to closely track the benchmark return, which broadly reflects overall US stock returns. At the end of April 2022, Vanguard 500 Index Fund (NYSE:VOO) offered an expense ratio of 0.03%. The fund has total net assets of $760.1 billion, with the top 10 holdings comprising 29% of the overall portfolio.
Apple Inc. (NASDAQ:AAPL) is the biggest holding of Vanguard 500 Index Fund (NYSE:VOO). With a market capitalization of more than $2 trillion, Apple Inc. (NASDAQ:AAPL) is one of the biggest multinational technology corporations in the United States, offering consumer electronics, software, and online services. Apple is also a strong dividend payer. The company declared on April 28 a $0.23 per share quarterly dividend, a 4.5% increase from its prior dividend of $0.22. The dividend was paid to shareholders on May 12. In addition to that, the board of directors authorized an increase of $90 billion to the previous share repurchase program.
According to Insider Monkey’s database, 131 hedge funds held long positions in Apple Inc. (NASDAQ:AAPL) at the end of March 2022, compared to 134 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with about 891 million shares worth $155.5 billion.
Here is what Berkshire Hathaway has to say about Apple Inc. (NASDAQ:AAPL) in its Q4 2021 investor letter:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its year end market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
You can also take a look at 10 Safe Stocks To Invest in For The Long-Term in 2022 and 10 Best Dividend Stocks for Roth IRA.
