The existing market volatility exacerbated amid sudden banking collapses and soaring odds of an economic slowdown, is not likely to ease anytime soon. Therefore, investors might check out 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 anxieties has set in amid the recent regional banking collapses, robust job data, and still-high inflation. On the backs of revved-up worries of inflation not easing quickly and smoothly as hoped, investors’ optimism was smashed.
On the contrary, the slightly eased inflation and banking jitters gradually diminishing did revitalize the optimism to some extent. However, newly popped-up worries for Credit Suisse spooked the stock markets on Wednesday. Market volatilities, still standing high, were substantiated by the 10.2% increase CBOE Volatility Index.
Moreover, amid turmoil in the broader financial system, Goldman Sachs (GS) reduced their 2023 economic growth forecast by 0.3 percentage points to 1.2%. Jim Caron, head of the macro strategy for global fixed income at Morgan Stanley Investment Management, fearing a recession, commented, “What you’re really seeing is a significant tightening of financial conditions. What the markets are saying is this increases risks of a recession and rightfully so.”
As market volatilities are not likely to subside anytime soon, it might be wise to diversify one’s portfolio through quality ETFs. Hence, fundamentally strong ETFs IVV and VIG could be ideal investments that investors might regret not buying in 2023.
iShares Core S&P 500 ETF (IVV)
IVV, one of the largest ETFs in the world, offers exposure to one of the world’s best-known and most widely followed stock indexes. This ETF tracks the S&P 500 Index, which includes many large and well-known U.S. firms.
As of March 15, IVV’s NAV stands at $390.88. It has an expense ratio of 0.03%, which is significantly lower than the category average of 0.37%.
The fund has approximately $289.53 billion in AUM. Its top holdings 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 comprising 26.29% of AUM.
The fund pays $6.39 per unit annually as dividends, translating to a yield of 1.63% at the current price level. Its dividend payout has grown 6.3% CAGR over the past five years. The fund has a four-year average yield of 1.73%.
The fund flows came in at $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 to close the last trading session at $391.16. Its five-year beta of 1.00.
IVV’s promising outlook is reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
IVV has a B grade for Buy & Hold. It is ranked #33 of 274 stocks in the Large Cap Blend ETFs category.
Beyond what has been discussed above, additional ratings for IVV (Trade and Peer) can be found here.
Vanguard Dividend Appreciation ETF (VIG)
VIG is an ETF launched and managed by The Vanguard Group, Inc. The fund seeks to track the performance of the NASDAQ US Dividend Achievers Select Index. Hence, it provides exposure to dividend-paying large-cap companies that exhibit growth characteristics within the U.S. equity market.
As of March 15, VIG’s NAV stands at $147.96. The fund has approximately $62.21 billion in Assets Under Management (AUM). It has an expense ratio of 0.06%, which is significantly lower than the category average of 0.37%.
VIG’s top holdings are UnitedHealth Group Inc. (UNH), which has a 3.79% weighting in the fund. It is followed by 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 comprising 28.79% of AUM.
The fund pays $2.97 per unit annually as dividends, translating to a yield of 2.01% at the current price level. Its dividend payouts have grown 11.7% CAGR over the past three years and 9.2% CAGR over the past five years. The fund has a four-year average yield of 1.77%.
Its net inflow came in at $61.79 billion over the past month and $541.18 million over the past six months. VIG has gained 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 its POWR Ratings. The ETF has an overall rating of B, which equates to Buy in our proprietary rating system.
VIG has a B grade for Trade, Buy & Hold, and Peer. It ranks #34 within the same ETF category. Click here to see all ratings for VIG.
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IVV shares were trading at $395.41 per share on Thursday afternoon, up $4.25 (+1.09%). Year-to-date, IVV has gained 2.92%, versus a 2.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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