Investors looking to put some capital to work in this market have their work cut out for them. Valuations continue to surge, as interest around equities continues to pick up following the Donald Trump election win this week. Active stock pickers have certainly been rewarded for picking specific stocks that may benefit from a new administration, but a range of outcomes is always possible with investing, and stock picking is hard than it looks.
Passive investors have benefited from these larger trends, and may have been able to do so without losing as much sleep. Exchange Traded Funds (ETFs) allow investors to essentially buy the market (or a basket of stocks within the market), effectively owning the benchmarks many peers are tracking their performance against. If you can’t beat the market (or don’t want to try), this is the approach that may make the most sense. And even the most avid stock pickers may choose to place a portion of their portfolio in such funds for diversification purposes – a move I think certainly can make sense for many looking to reduce their portfolio’s risk profile.
In this article I’m going to discuss three low-cost ETFs I think are worth buying following the election. Let’s dive in!
Key Points About This Article:
- The rise of exchange traded funds (ETFs) as investment vehicles to provide steady and consistent returns at a low cost benefits millions of investors, but there are many to choose from.
- Here are three top ETFs I think long-term investors may want to consider adding in November.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF (NYSEMKT:VTI) is an ETF I’ve written about quite a bit in the past. That’s for good reason. This top ETF is among the leading index funds, tracking the entire U.S. stock market. Holding 3,650 stocks spread across a wide range of sectors in market cap-weighted fashion, the VTI lets investors literally buy the entire market. And at an incredibly-low expense ratio of just 0.03%, this diversification is provided essentially for free (that amounts to roughly $30 per year for a $100,000 portfolio).
Of course, investors will need to trust that the overall market will continue to head higher. Over the long-term, this is certainly true. However, periods of volatility will exist, and investors will certainly give up some amount of control or autonomy over which sectors are over and underweight. That said, as mentioned, picking stocks around the edges to enhance exposure to one particular area is a way to get around this (and that’s the strategy I employ).
The S&P 500 covers only 500 large-cap U.S. stocks, but the Vanguard Total Stock Market ETF offers complete U.S. market exposure. Thus, for long-term investors looking for complete exposure to the market, and believe that long-term growth in North America (and around the world) will continue to remain robust, this is a great way to go in November in my view.
Vanguard Utilities ETF (VPU)
The utilities sector is one that I don’t think gets enough love. Companies covered in this sector generally provide investors with extremely stable cash flows, many operate in regulated markets, and sell their products (mainly energy for heating and lighting) to customers that basically have to pay their bills. Thus, as far as a defensive sector to invest in for the long-term is concerned, this is one worth considering.
In my view, the Vanguard Utilities ETF (NYSEMKT:VPU) is one of the premier exchange traded funds in this space, allowing investors to benefit from 2.4% annual U.S. electricity growth projected through 2030. That’s not just from any analyst, that’s Goldman Sachs saying this, so I do think this spike is worth noting considering it would be the largest such spike seen since the early 2000s. While future outperformance isn’t guaranteed, AI’s impact could make utilities a prime sector for growth, and VPU provides straightforward exposure to this potential.
The VPU gained 25% since January, surpassing the S&P 500’s sub-20% rise. Utilities offer stability amid economic uncertainty, drawing investors seeking safe, predictable returns. With a 2.9% yield (double the S&P 500 average) and a low 0.10% expense ratio, VPU remains appealing. This is among the top ETFs in my portfolio, and the only one I hold with sector-specific performance. Simply put, I like the durability and stability of the cash flows these companies provide, and believe the utilities sector is one that could continue to keep pace with the broader stock market over the long-term in terms of total returns (with a higher emphasis on dividend yield of course).
SPDR S&P Bank ETF (KBE)
Last. but certainly not least, we have the SPDR S&P Bank ETF (NYSEMKT:KBE). This ETF tracks the broader financials sector, benefiting from longer-term trends in how capital markets operate and how beneficial debt creation has been historically for large lenders.
The ETF’s performance over the past year has been notably strong, driven by a mean reversion following last year’s regional bank blowup fiasco. Since then, banks have seen investor interest come back to normal levels, with significant interest across the board reflected in this ETF’s 33% year-to-date return, at the time of writing.
The fund’s gross expense ratio remains relatively low at around 0.35%, though it is higher than the aforementioned funds discussed in this piece. However, for those looking for exposure to the banking sector in particular, and who believe this year’s rebound can continue into 2025 (as I do), this is a fund to certainly consider at current levels.
Banks tend to have much more favorable valuations than other sectors, and during bull markets can product strong cash flow (and dividend yields) which provide market-beating returns. This is one top ETF I think can be worth buying in November for those who believe this bull market will continue in the coming year.
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