Existing market volatility, exacerbated by sudden bank failures and the increasing likelihood of an economic slowdown, is unlikely to ease any time soon. Therefore, investors should consider the ETFs iShares Core S&P 500 ETF (IVV) and Vanguard Dividend Appreciation ETF (vig) for 2023 to diversify their portfolio.
A fresh bout of fears has emerged amid recent regional bank failures, robust employment data and still high inflation. On the back of troubled concerns that inflation will not subside quickly and smoothly as hoped, Investor optimism was shattered.
On the contrary, the slight drop in inflation and the gradual easing of nervousness among the banks revived optimism somewhat. However, newly emerged concerns for CreditSuisse spooked the stock markets on Wednesday. The still high market volatility was underpinned by the increase of 10.2% CBOE Volatility Index.
Additionally, amid the turmoil in the broader financial system (GS) lowered its forecast for economic growth in 2023 by 0.3 percentage points to 1.2%. Commenting on fears of a recession, Jim Caron, head of macro strategy for global fixed income at Morgan Stanley Investment Management, said: “What you’re really seeing is a significant tightening in financial conditions. What the markets are saying is this increases the risk of a recession and rightly so.”
As market volatilities are unlikely to abate in the foreseeable future, It may be wise to diversify your portfolio with high-quality ETFs. Therefore fundamentally strong ETFs IVV and VIG could be ideal investments that investors may not have bought in 2023.
iShares Core S&P 500 ETF (IVV)
IVV, one of the largest ETFs in the world, offers access to one of the world’s best known and most widely used stock indices. This ETF tracks the S&P 500 Index, which includes many large and well-known US companies.
From March 15 IVV’s The NAV is $390.88. It has a expense ratio of 0.03%, which is well below the category average of 0.37%.
The fund has approximately $289.53 billion in assets under management. It is top stocks are Apple Inc. (AAPL), which has a 6.94% weighting in the fund, followed by Microsoft Corporation (MSFT) at 5.91% and Amazon.com, Inc. (AMZN) at 2.56%. The fund has a total of 509 holdings, with the top 10 assets accounting for 26.29% of assets under management.
The fund pays $6.39 per share annually in dividends, which translates to a 1.63% yield at current prices. The dividend payout has grown at a CAGR of 6.3% over the past five years. The fund has a four-year average return of 1.73%.
Fund inflows totaled $538.12 million over the past six months and $9.23 billion over the past year. Over the past three months, VTI has gained marginally, closing the last trading session at $391.16. Its five-year beta of 1.00.
The IVV’s promising prospects are reflected in its POWR ratings. It has an overall rating of B, which equates to buying in our proprietary rating system. The POWR ratings are calculated considering 118 different factors, with each factor being optimally weighted.
IVV has a B grade for Buy & Hold. It is ranked 33rd out of 274 stocks in the ranking Large Cap Blend ETFs Category.
In addition to what is discussed above, additional IVV (Trade and Peer) ratings can be found Here.
Vanguard Dividend Appreciation ETF (vig)
VIG is an ETF created and managed by The Vanguard Group, Inc. The fund attempts to track the performance of the NASDAQ US Dividend Achievers Select Index. As such, it offers exposure to large-cap dividend-paying companies that exhibit growth characteristics in the US equity market.
From March 15, VIG The NAV stands at $147.96. The fund has approximately $62.21 billion in assets under management (AUM). It has a expense ratio of 0.06%, which is well below the category average of 0.37%.
VIG’s top stocks Are United Health Group Inc. (UNH), which has a weighting of 3.79% in the fund. It follows MSFT at 3.56% and JPMorgan Chase & Co. (JPM) at 3.50%. The fund has a total of 289 holdings, with the top 10 assets accounting for 28.79% of assets under management.
The fund pays $2.97 per share annually in dividends, which translates to a 2.01% yield at current prices. Its dividend payouts are up CAGR 11.7% over the last three years and CAGR 9.2% over the last five years. The fund has a four-year average return of 1.77%.
Net inflow was $61.79 billion last month and $541.18 million over the past six months. VIG is up 1.2% over the past six months to close the last trading session at $148.05. It has a five-year beta of 0.84.
VIG’s strong fundamentals are reflected in their POWR ratings. The ETF has an overall rating of B, which equates to buy in our proprietary rating system.
VIG has a B rating for Trade, Buy & Hold and Peer. It ranks #34 within the same ETF Category. Click here to view all reviews for VIG.
What do you do next?
Get this special report:
7 HUGE undervalued stocks
The best thing about the recent bear market is that there are thriving companies trading at huge discounts to fair value.
This combination of excellent earnings growth and low price is a great catalyst for investor success.
And this report focuses on the 7 best of these stocks that are poised to rise in the coming weeks. Click below to request your copy now.
7 HUGE undervalued stocks
IVV shares traded at $395.41 per share on Thursday afternoon, up $4.25 (+1.09%). Year-to-date, the IVV is up 2.92% versus a 2.93% gain for the benchmark S&P 500 index over the same period.
About the Author: Sristi Suman Jayaswal
Stock market dynamics piqued Sristi’s interest while she was still at school, which led her to become a financial journalist. Their preferred strategy is to invest in undervalued stocks with solid long-term growth prospects. After earning a master’s degree in accounting and finance, Sristi hopes to deepen her investment research experience and better guide investors. More…
