In this article, we discuss 5 best Vanguard ETFs to invest in. If you want our detailed analysis of these ETFs, go directly to 10 Best Vanguard ETFs to Invest In.
5. Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO)
Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) closely tracks the returns of the FTSE Emerging Markets All Cap China A Inclusion Index, investing in companies located in emerging markets around the world, such as China, Brazil, Taiwan, and South Africa. The exchange traded fund owns 5,293 stocks in its portfolio, with total net assets equalling $112.0 billion, and a top ten holdings concentration of 21.4%.
A prominent holding of Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) is Alibaba Group Holding Limited (NYSE:BABA), a Chinese company providing e-commerce, technology infrastructure, and marketing reach to merchants and customers in China and internationally.
On March 3, Baird analyst Colin Sebastian lowered the price target on Alibaba Group Holding Limited (NYSE:BABA) to $160 from $180 and kept an Outperform rating on the shares. The analyst stated that the biggest takeaway from the quarter is that Alibaba Group Holding Limited (NYSE:BABA) remains focused on long-term growth despite the near-term macro and competitive headwinds, and he continues to see significant value in the company’s technology oriented e-commerce and cloud services platform.
In Q4 2021, 96 hedge funds were bullish on Alibaba Group Holding Limited (NYSE:BABA), compared to 115 funds in the prior quarter. Fisher Asset Management held the biggest stake in the company, with 14.1 million shares worth $1.68 billion.
Here is what Longleaf Partners International Fund has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2021 investor letter:
“Alibaba (-50%, -2.26%; -22%, -0.82%), the largest online retail platform in China, was another top detractor for the year and in the fourth quarter. Alibaba reported weak quarterly results and downgraded its sales outlook for the current fiscal year to 20- 23% growth, down from original guidance of 29-32% growth. Macro headwinds, weak consumer sentiment, regulatory scrutiny and competitive forces are having a larger than expected impact on overall retail sales and Alibaba’s market share. Notably, overall retail sales in China slowed down to a meager 5% growth in the September quarter. Slowing consumption, combined with stiff competition from new entrants in livestreaming ecommerce, have resulted in transitory deceleration in Alibaba’s core ecommerce growth trajectory. Additionally, the company is accelerating strategic investments in new initiatives, including Community Group Buying (Taocaicai), Taobao Deals, Local Consumer Services and International Ecommerce. These are future growth drivers but are depressing the company’s earnings today. In December, we exited our full position in Alibaba. This was more of a tactical move than a change in investment conviction. We initiated the position early in 2021, and the continued challenges in the second half of the year resulted in a loss that was material enough to be helpful from a tax distribution management point of view. We are sensitive to taxable gains and try to minimize where sensible, so we took advantage of the opportunity to reduce that liability and plan on revisiting the Alibaba opportunity in 2022. We continue to own Alibaba in our Asia Pacific strategy.”
4. Vanguard Health Care Index Fund ETF Shares (NYSE:VHT)
Vanguard Health Care Index Fund ETF Shares (NYSE:VHT) is a passively managed exchange traded fund that uses a full-replication strategy and tracks the performance of a benchmark index that measures the investment return of stocks in the healthcare sector. The investments are focused in the biotechnology, healthcare equipment, healthcare services, managed healthcare, pharmaceuticals, and the life sciences industries.
A major holding of Vanguard Health Care Index Fund ETF Shares (NYSE:VHT) is Pfizer Inc. (NYSE:PFE), a healthcare company that develops and manufactures biopharmaceutical products and vaccines worldwide. On March 3, Pfizer Inc. (NYSE:PFE) announced that it will provide about 10 million courses of its COVID-19 therapy Paxlovid to low and middle-income nations in 2022.
Elite hedge funds hold an exceedingly bullish stance on Pfizer Inc. (NYSE:PFE). The Q4 database of Insider Monkey reported that 83 hedge funds were bullish on Pfizer Inc. (NYSE:PFE), up from 74 funds in the prior quarter. Philippe Laffont’s Coatue Management held 10.3 million shares of Pfizer Inc. (NYSE:PFE), worth approximately $609 million. Coatue Management is a leading shareholder of the company.
Here is what Saturna Capital Amana Funds has to say about Pfizer Inc. (NYSE:PFE) in its Q3 2021 investor letter:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer. The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”
3. Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT)
Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT) tracks the performance of a benchmark index that holds stocks from the information technology sector. As of January 31, 2022, the ETF owns 360 stocks, with the top ten stocks comprising 60.50% of the total investments. The total net assets held by Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT) equal $58.5 billion.
Visa Inc. (NYSE:V) is one of the prominent underlying stocks in Vanguard Information Technology Index Fund ETF Shares (NYSE:VGT)’s portfolio, which is a financial technology firm that provides payments solutions worldwide. Of the 142 hedge funds that were bullish on Visa Inc. (NYSE:V) in Q4 2021, TCI Fund Management is the biggest shareholder of the company, with a stake exceeding $5 billion.
Here is what Artisan Value Fund has to say about Visa Inc. (NYSE:V) in its Q4 2021 investor letter:
“We initiated two new positions in Q4, adding Visa. Visa is a global payments company and is one of the four major US credit card networks (along with Mastercard, American Express and Discover). Visa is accepted at over 80 million merchant locations in 200 countries, interacts with 15 thousand financial institutions and processed 165 billion transactions with $13 trillion of payments and cash volume in the 12-month period ending September 2021. We have always admired Visa’s business, but its valuation prevented it from getting over the hurdle and into the portfolio. As of late, the stock has been caught up in indiscriminate selling as part of a larger unwind trade in a richly valued fintech space. Concerns also exist about Visa’s slowdown in cross-border transactions due to COVID and its net-revenue sharing arrangements with Amazon. This created an opportunity to purchase a very high quality business that benefits from substantial barriers to entry, network effects and several structural growth drivers, including consumer spending growth, the shift from cash to card, increasing ecommerce penetration, market share growth and global expansion. We believe Visa has a long runway for revenue growth as cash and checks continue to lose share. Consumers can’t use cash and checks online, after all. From a “safer” perspective, the company has a rocksolid balance sheet and has a high conversion of net income to free cash flow, which it uses for share repurchases, dividend growth and tuck-in acquisitions.”
2. Vanguard Value Index Fund ETF Shares (NYSE:VTV)
Vanguard Value Index Fund ETF Shares (NYSE:VTV) is a passively managed exchange traded fund that fully replicates the performance of the CRSP US Large Cap Value Index, which measures the investment return of large-cap value stocks. The ETF’s portfolio holds 351 securities as of January 31, with a top ten holdings concentration of 20.4%. The net assets of the exchange traded fund amounted to $141.4 billion.
A notable underlying security in Vanguard Value Index Fund ETF Shares (NYSE:VTV)’s portfolio is JPMorgan Chase & Co. (NYSE:JPM), which operates as a financial services company worldwide, offering consumer and community banking, corporate and investment banking, and asset management.
JPMorgan Chase & Co. (NYSE:JPM) announced on March 8 that it will exclude Russian sovereign and corporate debt from its closely watched fixed-income indexes, including the Emerging Market Bond Index and the Corporate Emerging Market Bond Index, as of March 31. At the same time, the company will exclude Belarus’s sovereign debt from its environmental, social, and governance-linked indexes.
Institutional investors hold large stakes in JPMorgan Chase & Co. (NYSE:JPM), and according to the fourth quarter database of Insider Monkey, 107 elite funds were bullish on the stock, up from 101 funds in the prior quarter. GQG Partners is a prominent shareholder of JPMorgan Chase & Co. (NYSE:JPM), with more than 5 million shares worth $806.7 million.
Here is what Miller Value Partners Opportunity Equity has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter:
“I remember writing about the attractiveness of JP Morgan (JPM) right before it lost about a third of its value in the third quarter of 2011 (which didn’t please some of my colleagues!). I believed JPM was a high-quality bank whose prospects were undervalued due to the overhang on the space. It made money every year through the financial crisis.
In the decade-plus since then, JPM has beaten the market nicely (+417% versus SPX +345%) despite significant headwinds for banks (S&P Financial Sector +286%) and value stocks. Low market expectations are a key ingredient to attractive long-term returns!
An earthquake after-shock metaphor helps to explain the situation. Earthquakes relieve tension in physical systems, but aftershocks are common. These aftershocks aren’t as serious as the original event because stresses have been relieved. The financial crisis alleviated tensions in the financial system as weaker players either perished or were shored up with capital. Lessons learned impacted behavior (lower risk-taking behavior and higher propensity for monetary authorities to intervene supportively), which reduced future risk.
Those realities didn’t matter in the short term, but they sure did in the long term.”
1. Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR)
Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR) uses a full-replication strategy to track a benchmark index measuring the investment return of stocks in the consumer discretionary sector. The fund holds 304 stocks in total, with net assets amounting to $7 billion as of January 31. The top ten holdings of Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR) comprise 59.6% of the overall investments.
The largest stock in the portfolio of Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE:VCR) is Amazon.com, Inc. (NASDAQ:AMZN), a multinational US tech firm. Amazon.com, Inc. (NASDAQ:AMZN) on March 3 announced that it is making moves to press the Federal Trade Commission’s decision on its multibillion-dollar deal to acquire MGM Studios (OTC:MGMB), an American media company that produces and distributes feature films and television programs, setting up a mid-March deadline for action.
A total of 279 hedge funds held long positions in Amazon.com, Inc. (NASDAQ:AMZN) at the end of December 2021, up from 242 funds in the prior quarter. Eagle Capital Management, a significant shareholder of the company, holds 677,828 shares of Amazon.com, Inc. (NASDAQ:AMZN), worth $2.2 billion.
Here is what Third Point Management has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2021 investor letter:
“We have long admired Amazon as investors (and appreciated its myriad benefits as consumers) and have owned shares several times in the past. We acquired a sizable position during the early innings of the pandemic ahead of what we believed would be a structural acceleration in revenue for the group. After lagging tech peers for most of last year, we significantly increased the size of our investment, reflecting our conviction that Amazon is at an important crossroads as new management considers its long-term strategic plan to move the company forward, which may include several bold initiatives that are the subject of wide market speculation at the proverbial investor water cooler.
Amazon’s most recent quarterly results bolstered our view that the company is now at an inflection point that should usher in an improvement in various metrics, as well as an upturn in the company’s share price. The long-term secular growth drivers for the company—cloud adoption and eCommerce penetration—remain firmly intact. Sales growth ought to reaccelerate as revenue comps ease. Fixed cost leverage should improve after a large investment cycle that effectively doubled the fulfillment capacity of the company over the past two years. Excess costs associated with the Covid pandemic, labor shortages, and supply chain disruption should start to disappear as the external environment normalizes. And, shares are still trading at the lower end of the company’s historical multiple range. It’s not often that you get to buy shares in a high-quality company at the low end of its valuation range ahead of a meaningful reacceleration in growth at a 30%-40% discount to its present intrinsic value with an almost unlimited runway of potential to compound in value.
While the fundamental outlook for shares looks bright, we were encouraged by two additional developments this quarter. First, we noted the Board repurchased shares in January 2022 for the first time in a decade. It is not hard to imagine that Amazon, like some of its peers, may start returning more capital to shareholders, especially as the balance sheet approaches a net cash position and free cash flow improves. Second, we noted the introduction of additional disclosure from management, specifically breaking out advertising revenue and detailing capital expenditures by category. Amazon is a large and complex company and greater financial disclosure will no doubt help investors better understand the various parts of the business and significant sum-of-the-parts value. We expect these shareholder-friendly moves may be just the tip of the iceberg as Amazon’s talented and focused new CEO Andy Jassy sets out his plan for the Company’s future.”
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