In this article, we discuss 5 ETFs to invest in for beginners. If you want to see more ETFs for those investors who are just beginning their trading journey, check out 10 ETFs to Invest in For Beginners.
5. Fidelity Value Factor ETF (NYSE:FVAL)
Fidelity Value Factor ETF (NYSE:FVAL) aims to track the performance of the Fidelity U.S. Value Factor IndexSM, which holds the large and mid-cap U.S. companies that have attractive valuations. The fund invests in 129 securities, offering a 30-day SEC yield of 1.50% and an expense ratio of 0.29%.
One of the leading securities in Fidelity Value Factor ETF (NYSE:FVAL)’s portfolio is Alphabet Inc. (NASDAQ:GOOG), the parent company of Google and Google subsidiaries. On June 2, Piper Sandler analyst Thomas Champion maintained an Overweight rating on Alphabet Inc. (NASDAQ:GOOG) but lowered the price target on the stock to $2,775 from $2,900. After a solid two-year streak, digital advertising spend seems to be normalizing, the analyst told investors. Group multiples have dropped and are 40% off recent highs, but history shows that multiples may not re-rate until after ad spend growth bottoms, added the analyst.
At the end of the first quarter of 2022, 160 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG), compared to 158 funds in the earlier quarter. Chris Hohn’s TCI Fund Management is one of the leading stakeholders of the company, with 2.3 million shares worth $6.6 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
4. Vanguard High Dividend Yield Index Fund (NYSE:VYM)
Vanguard High Dividend Yield Index Fund (NYSE:VYM) tracks the investment returns of the FTSE High Dividend Yield Index, which consists of companies characterized by high dividend yields. The fund follows a passively managed, full-replication approach, offering an expense ratio of 0.06%. The investments are concentrated in the industrials, healthcare, financials, energy, consumer discretionary, and consumer staples sectors.
The biggest holding of Vanguard High Dividend Yield Index Fund (NYSE:VYM) is Johnson & Johnson (NYSE:JNJ), an American multinational healthcare company. Johnson & Johnson (NYSE:JNJ) is a notable dividend king, with 60 years of consistent dividend increases under its belt. On April 19, the company declared a $1.13 per share quarterly dividend, a 6.6% increase from its prior dividend of $1.06. The dividend is payable on June 7. Johnson & Johnson (NYSE:JNJ) delivers a dividend yield of 2.56% as of June 6.
According to Insider Monkey’s data, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) at the conclusion of the first quarter of 2022, with collective stakes worth $7.40 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with 6.65 million shares worth $1.17 billion.
3. Vanguard Small Cap Index Fund (NYSE:VB)
Vanguard Small Cap Index Fund (NYSE:VB) tracks the performance of the CRSP US Small Cap Index, providing exposure to diversified domestic small-cap companies with a passively managed, full-replication approach. Vanguard Small Cap Index Fund (NYSE:VB) offers an expense ratio of 0.05%. The total net assets held as of the end of April were $120.5 billion and the portfolio consists of 1,548 stocks. Vanguard Small Cap Index Fund (NYSE:VB) primarily invests in the technology, real estate, industrials, healthcare, financials, and consumer discretionary sectors.
The biggest holding of Vanguard Small Cap Index Fund (NYSE:VB) is Constellation Energy Corporation (NASDAQ:CEG), a company that generates and sells electricity in the United States, operating through five segments – Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions.
Wells Fargo analyst Neil Kalton on May 13 reiterated an Overweight recommendation on Constellation Energy Corporation (NASDAQ:CEG) but lowered the price target on the stock to $70 from $75. Although he adjusted his price multiple, his positive thesis after the Q1 results remains unchanged and he recommends investors take advantage of the share price weakness to boost or build positions. Over the long-term, the analyst continues to see Constellation Energy Corporation (NASDAQ:CEG)’s attractive nuclear fleet positioned to capitalize on the zero carbon theme.
According to Insider Monkey’s data, 47 hedge funds were bullish on Constellation Energy Corporation (NASDAQ:CEG) at the end of March 2022, with collective stakes worth $1.12 billion.
2. SPDR Portfolio S&P 500 Value ETF (NYSE:SPYV)
SPDR Portfolio S&P 500 Value ETF (NYSE:SPYV) tracks the total return performance of the S&P 500 Value Index, identifying stocks on the basis of book value to price ratio, earnings to price ratio, and sales to price ratio. The fund has assets under management of $13.4 billion as of June 6, offering a gross expense ratio of 0.04% and a distribution yield of 2.06%.
The biggest holding in SPDR Portfolio S&P 500 Value ETF (NYSE:SPYV)’s portfolio is Berkshire Hathaway Inc. (NYSE:BRK-B), an Omaha-based diversified conglomerate engaged in the insurance, freight rail transportation, and utility businesses worldwide. On April 30, Berkshire Hathaway Inc. (NYSE:BRK-B) reported its Q1 financial results, reporting an EPS of $3.18 and a revenue of $70.81 billion, outperforming Street estimates by $0.31 and $1.66 billion, respectively.
According to Insider Monkey’s first quarter database, 104 hedge funds were bullish on Berkshire Hathaway Inc. (NYSE:BRK-B), with collective stakes worth $19 billion, compared to 108 funds in the earlier quarter, holding stakes in the company valued at $19.3 billion.
1. iShares Core S&P Total U.S. Stock Market ETF (NYSE:ITOT)
iShares Core S&P Total U.S. Stock Market ETF (NYSE:ITOT) seeks to track the investment results of the S&P Total Market Index, a broad index comprising U.S. equities, including small, mid, and large-cap plays. As of June 6, the fund owns 3,623 stocks in its portfolio and has a 30-day SEC yield of 1.40% as of April 29. The management fee equals 0.03%.
One of the largest holdings in iShares Core S&P Total U.S. Stock Market ETF (NYSE:ITOT)’s portfolio is Tesla, Inc. (NASDAQ:TSLA), the California-based manufacturer of electric vehicles and battery energy storage systems. On June 1, Goldman Sachs analyst Mark Delaney maintained a Buy rating on Tesla, Inc. (NASDAQ:TSLA) but adjusted the price target to $1,000 from $1,200. In the U.S. autos and industrial technology space, he is widely cutting estimates and price targets to account for increasing logistical constraints in the short-term and softer demand in the intermediate-term, he told investors.
According to Insider Monkey’s data, Catherine D. Wood’s ARK Investment Management is a significant stakeholder of the company, with 1.59 million shares worth $1.71 billion. Overall, 80 hedge funds were bullish on the stock at the end of March 2022.
Here is what Baron Fifth Avenue Growth Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“During the first quarter, we bought back shares in Tesla, Inc., which designs, manufactures, and sells electric vehicles, solar products, energy storage solutions, and batteries. We believe that despite the run in the stock over the last few years, Tesla presents a favorable risk/reward profile and remains a Big Idea with only about 1% market share of the automotive market. Since we bought the stock during the first quarter, shares increased 27.1%, despite a complex supply-chain environment, on continued revenue growth and record profitability. Robust demand and operational optimization allow the company to offset inflationary pressures while vertical integration provides flexibility around supply bottlenecks. Moreover, we expect new localized manufacturing capacity to drive additional efficiencies while software initiatives, including the autonomous driving program, are accelerating, offering valuable optionality to the stock.”
You can also take a look at 10 Best ETFs to Invest In for Retirement and 10 Growth ETFs to Buy Now.
