In this article, we will take a look at the 5 best Vanguard ETFs for portfolio diversification. To see more such companies, go directly to 10 Best Vanguard ETFs for Portfolio Diversification.
5. Vanguard Financials Index Fund ETF (NYSE:VFH)
Number of Hedge Fund Holders: 5
2022 showed that the financial sector is one of the best–positioned industries to thrive in a rising interest rate environment. The industry is also full of stable, dividend-paying stocks. The Vanguard Financials Index Fund ETF (NYSE:VFH) is one of the best Vanguard ETFs for portfolio diversification. Vanguard Financials Index Fund ETF (NYSE:VFH) invests in financial services companies. Some of the biggest holdings of the ETF include JPMorgan, Wells Fargo and Bank of America (NYSE:BAC), America’s top three banks. Its biggest holding is Berkshire Hathaway Inc. (NYSE:BRK-B), in which the ETF has an $877 million stake.
On January 10, Odeon Capital’s Dick Bove upgraded Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC), among several other stocks. The analyst said:
“I, like many others, believe there will be a recession, but I do not believe it will be severe. The time has come to focus on the fact that there has been a cycle change and this change definitely benefits banking.”
4. Vanguard Emerging Markets Stock Index Fund ETF (NYSE:VWO)
Number of Hedge Fund Holders: 12
One of the best ways for portfolio diversification is to invest in emerging markets. These high-growth markets are continuing to post record growth numbers despite the macroeconomic volatility. The Vanguard Emerging Markets Stock Index ETF invests in major emerging markets including Brazil, Russia, India, Taiwan, and China. Vanguard Emerging Markets Stock Index Fund ETF (NYSE:VWO) price as of January 11 is $34. This means investors can pile into major emerging markets of the world in budget via this ETF, which has gained about 2% over the past six months. The total number of stocks the Vanguard Emerging Markets Stock Index Fund ETF (NYSE:VWO) is invested in is over 5,000. Among the top holdings of this ETF are Taiwan Semiconductor Manufacturing, Tencent Holdings and Alibaba Group Holding Ltd.
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is one of the most important semiconductor stocks in the world. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) recently gained even after Vanguard Emerging Markets Stock Index Fund ETF (NYSE:VWO) posted a revenue decline for December. Taiwan Semiconductor makes chips for several major companies in the world, including Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA).
A total of 87 hedge funds tracked by Insider Monkey reported having stakes in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), compared to 72 funds in the previous quarter. The total value of these stakes was $13.2 billion.
3. Vanguard Growth Index Fund ETF (NYSE:VUG)
Number of Hedge Fund Holders: 12
While growth stocks brought pain for investors in 2022, analysts are hopeful that an expected market rebound in 2023 is going to benefit growth stocks with solid fundamentals. Vanguard Growth Index Fund ETF (NYSE:VUG) is one of the best ETFs to buy for portfolio diversification. Tesla is among the most notable holdings of the Vanguard Growth Index ETF (NYSE:VUG). The Vanguard Growth Index ETF (NYSE:VUG) has a $4.3 billion stake in Vanguard Growth Index Fund ETF.
Tesla Inc. (NASDAQ:TSLA) continues to remain on the radar of famous growth investors despite losses. On January 10, it was reported that Cathie Wood’s bought another 100,982 shares of Tesla Inc. These shares have a total value of a whopping $12 million. As of the end of the third quarter, Cathie Wood’s fund had a $1.1 billion stake in the company.
Overall, hedge funds are bullish on Tesla Inc. (NASDAQ:TSLA). At the end of the September quarter, 88 funds reported having stakes in the EV company, compared to 73 funds in the previous quarter.
2. Vanguard High Dividend Yield ETF (NYSE:VYM)
Number of Hedge Fund Holders: 8
Dividend stocks were among the star performers in 2022 and investors are expected to continue to pile into dividend stocks for certainty and regular cash. The Vanguard High Dividend Yield ETF (NYSE:VYM) tracks the performance of the FTSE High Dividend Yield Index. Vanguard High Dividend Yield ETF (NYSE:VYM) is invested in about 440 stocks. Financials account for about 20% of the total ETF holdings. The biggest holding of Vanguard High Dividend Yield ETF (NYSE:VYM) is Johnson & Johnson.
Johnson & Johnson (NYSE:JNJ) has a dividend yield of over 2.5% as of January 11.
A total of 85 hedge funds in Insider Monkey’s database of 920 funds had stakes in Johnson & Johnson (NYSE:JNJ) as of the end of the third quarter.
1. Vanguard Consumer Staples ETF (NYSE:VDC)
Number of Hedge Fund Holders: 7
The consumer staples sector is considered among the safest sectors during recession since it consists of companies that continue to see consumer demand even during market downturns. This Vanguard ETF (NYSE:VDC) invests in companies which sell non-discretionary items. The biggest holding of the ETF is Procter & Gamble (NYSE:PG). Procter & Gamble (NYSE:PG) has been increasing its dividends consistently for the past 66 years.
A total of 69 hedge funds tracked by Insider Monkey reported having stakes in Procter & Gamble (NYSE:PG) as of the end of the third quarter.
You can also take a peek at Top Stocks in Each Sector and Dow 30 Stocks List 2022.
