The article highlights that certain exchange-traded funds (ETFs) provide investors with exposure to companies of all size categories, including international firms. It addresses common misconceptions about investing, noting that while investing can appear complex, it does not necessarily require advanced knowledge. One way to simplify investing is through the use of ETFs, which can help create a diversified portfolio without the need to invest in a large number of individual stocks.
The article outlines four Vanguard ETFs that contribute to a well-rounded portfolio for long-term investing.
Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO) is suggested as an excellent single-investment option due to its composition, which includes 500 of the largest U.S. companies. This ETF offers exposure to a diverse array of industry-leading companies across major sectors. The sector breakdown as of September 30th includes information technology, financials, and healthcare as significant components. Although market volatility can affect any stock or ETF, this ETF is generally considered more stable due to its inclusion of large-cap companies, which are typically better equipped to handle market fluctuations.Vanguard Mid-Cap ETF
The Vanguard Mid-Cap ETF (VO) includes over 310 mid-sized companies, offering a balance between stability and growth potential. These companies typically have a market capitalization between $2 billion and $10 billion, making them agile enough for new opportunities yet large enough to have sustainable business models. The ETF is well-diversified across sectors, with a significant representation in industrials, consumer discretionary, financials, technology, and healthcare.Vanguard Small-Cap ETF
The Vanguard Small-Cap ETF (VB) consists of over 1,300 small-cap companies with a median market cap of $7.8 billion. Unlike other small-cap ETFs, it does not track the Russell 2000 index but remains broad and diversified. While small-cap stocks can be more volatile and risky, they offer potential growth benefits. The article notes that small-cap positions should ideally comprise around 10% of a stock portfolio.- Vanguard Total International Stock ETF
The Vanguard Total International Stock ETF (VXUS) offers exposure to international companies from both developed and emerging markets. While developed markets provide economic stability, emerging markets present opportunities for higher growth despite higher risks. It is suggested that international stocks might form up to 20% of an investment portfolio.
The article concludes by noting the investment positions held by Stefon Walters and The Motley Fool in the mentioned ETFs, respectively.
