The billionaire hedge funds have been buying and selling plenty of individual names over the past quarter. And while it’s mostly been selling, I still think that it’s not the best idea to overreact either way, even if the smart money and the retail crowd seem divided. Despite the latest wave of volatility, which made for a rather rough Thursday of trade for the S&P 500, which ended the day down 1.7%, with the Nasdaq 100 finishing down just a hair over 2%, I still think that standing by the proven winners, especially those with still-reasonable multiples, makes the most sense.
Of course, if you’ve made a huge profit in a stock and are ready to rotate into some of the more defensive parts of the market, feel free to rotate before a panic even has a chance to happen. It’s never a bad idea to take a gain off the table, especially if you’re able to offset capital losses before the year’s end. That said, rotating just for the sake of rotating or minimizing damage in the next market sell-off might be met with mixed results.
Some ETFs Have a Lot to Offer — Just Ask the Smart Money
The way I see it, if you’re comfortable with taking a huge double-digit percent hit to the chin by hanging onto a high-flying AI play that might be punished further, holding on with your sights set on the long term isn’t being irrational, at least in my view. However, if your sleep has been disrupted by this past week of tech volatility, perhaps you’re overexposed and your well-being might benefit from a bit of rotation, even if a sell-off never materializes in this fourth quarter.
While hedge funds and the smart money crowd are smart, they can’t predict the future. And they’re not immune to the occasional fumble. In any case, here are some interesting Vanguard ETF buys from the third quarter that have a lot more to offer than meets the eye.
Sure, it’s a bit strange to learn of hedge funds buying ETFs, but the moves strike me as being quite smart, especially if an overweighting in red-hot AI plays is a ticket for more pain.
Vanguard Growth ETF
David Katz’s Matrix Asset Advisors, among other funds, reportedly added to their positions in Vanguard Growth ETF (NYSEARCA:VUG | VUG Price Prediction) in this latest quarter.. And while the buys were quite small (less than 1%) relative to the size of the overall portfolio, I do find the ETF buys to be quite intriguing, especially when you consider it’s an even more magnificent version of the S&P 500, with even more exposure to the Magnificent Seven names.
Undoubtedly, if you’re a fan of mega-cap tech, perhaps it’s not a bad idea to gain more exposure via such a low-cost Vanguard product. With a 0.04% expense ratio and far better gains on a year-to-date basis than the S&P, the Vanguard Growth ETF stands out as an ETF that could outpace the S&P on the way up, but also the way down.
If the AI bubble deflates a bit going into 2026, perhaps the Vanguard Growth ETF could prove a better name to watch on weakness as it takes on more damage. Despite the heavier growth focus, I find it enticing that the beta (1.14) is only marginally higher.
Vanguard FTSE Developed ETF
Investing overseas can be tricky, but it doesn’t have to be if you’re willing to pick up a few shares of the Vanguard FTSE Developed ETF (NYSEARCA:VEA), which David Katz’s Matrix Asset Advisers reportedly did in the third quarter. The ETF is a fantastic pick that provides instant exposure to some of the most influential large-cap firms outside of the U.S.
Whether you’re interested in betting on Japan, the U.K., Canada, or other parts of Europe, the Vanguard FTSE Developed ETF is an easy, cheap way (0.03% expense ratio) to get the job done. With so much innovation happening beyond the U.S., I think such an international ETF fills in a lot of the gaps that a domestically overexposed portfolio might have.
Top Gaining Stocks
Top Losing Stocks