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In the ever-changing world of investing, market volatility can be as constant as change itself. The swings can unnerve even the most seasoned investors, tempting them to make hasty decisions that may harm their long-term financial goals.
Many may be scared of the ongoing stock market volatility caused by higher rates, high inflation and geopolitics, but economic and corporate fundamentals do not seem to be a cause of concern. While many have taken 75 bps Fed rate cuts this year for granted and expect a continued market rally, Fed's Waller’s latest comment may counter their complacency.
Federal Reserve governor Chris Waller said Wednesday night that he is in no hurry to slash interest rates after hotter inflation data in the first two months of the year. The recent data "tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%,” as quoted on Yahoo Finance.
After this remark, the S&P 500’s fresh record high may not be sustainable. Then, what should be your stance? Should you stay invested in the markets or wait on the sidelines?
An article published on MarketWatch points out that for more than 100 years, stocks have almost doubled every eight years irrespective of geopolitical crisis, bubbles, credit defaults, pandemics, currency devaluations and inflation.
If you go by Warren Buffett, “the stock market is a device which transfers money from the impatient to the patient.” Hence, we highlight a few ETFs that can be invested and held in the current volatile market as these products are ageless and great long-term holdings.
The fund IVV tracks the performance of the S&P 500 index, which comprises 500 of the largest publicly traded companies in the United States. It offers exposure to blue-chip stocks across multiple sectors and has historically delivered competitive returns compared to other large-cap benchmarks.
There is no five-year period in history where the S&P failed to give gains, per the MarketWatch article. The index recently hit an all-time high. It is up 10% this year, gained 32.3% in the past year and added 85% in the past five years.
Having an exposure to the overall stock market, irrespective of capitalization and style is an intriguing bet over the long term as it offers true diversification. Diversification is a way to win in an unstable market.
The underlying CRSP US Total Market Index representing nearly 100% of the U.S. investable equity market covering nearly 4,000 constituents across mega, large, small and micro capitalizations. The fund VTI charges 3 bps in fees and yields 1.37% annually. The fund is up 10.2% so far this year, jumped 31.2% past year and surged about 80% in the past five years.
Gold has traditionally been seen as a safe haven in times of financial uncertainty. The SPDR Gold Shares ETF offers investors an effective way to incorporate gold into their portfolio without the need to physically own the metal.
GLD tracks the price of gold bullion, providing a hedge against inflation and currency devaluation. For investors looking to diversify their holdings and protect against systemic risks, GLD can be a golden choice. The fund is up 6.5% this year, added 10.7% past year and has jumped 66.5% in the past five years.
Stocks that hike dividends continuously are safe bets. Over the last 90 years, dividends have accounted for more than 40% of the total return of the markets, per a research paper out from Morgan Stanley. From 1991 through 2015, non-dividend paying stocks earned only 4.18% returns per year while dividend-paying stocks significantly outperformed with a 9.7% average annual return, the paper highlighted.
The underlying S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend-yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years. SDY charges 35 bps in fees and yields 2.52% annually. The fund is up 4.7% this year, 8.4% past year and 31.7% in the past five years.
Technological innovations are part and parcel of the current era. We believe that no matter if the Fed hikes, pauses, stays the course, or cuts rates, tech investing will be in fine fettle due to the AI boom and the perception that the era of rock-bottom rates is over. Both tech and higher rates are the new normal, and investors are becoming accustomed to it.
The tech fund XLK charges 9 bps in fees and yields 0.71% annually. The fund has gained 11.4% this year, surged 44.8% past year and skyrocketed 182% in the past five years.
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5 Good ETFs to Buy & Hold For Years
In the ever-changing world of investing, market volatility can be as constant as change itself. The swings can unnerve even the most seasoned investors, tempting them to make hasty decisions that may harm their long-term financial goals.
Many may be scared of the ongoing stock market volatility caused by higher rates, high inflation and geopolitics, but economic and corporate fundamentals do not seem to be a cause of concern. While many have taken 75 bps Fed rate cuts this year for granted and expect a continued market rally, Fed's Waller’s latest comment may counter their complacency.
Federal Reserve governor Chris Waller said Wednesday night that he is in no hurry to slash interest rates after hotter inflation data in the first two months of the year. The recent data "tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%,” as quoted on Yahoo Finance.
After this remark, the S&P 500’s fresh record high may not be sustainable. Then, what should be your stance? Should you stay invested in the markets or wait on the sidelines?
An article published on MarketWatch points out that for more than 100 years, stocks have almost doubled every eight years irrespective of geopolitical crisis, bubbles, credit defaults, pandemics, currency devaluations and inflation.
If you go by Warren Buffett, “the stock market is a device which transfers money from the impatient to the patient.” Hence, we highlight a few ETFs that can be invested and held in the current volatile market as these products are ageless and great long-term holdings.
ETFs in Focus
iShares Core S&P 500 ETF (IVV - Free Report) ) – Zacks Rank #1 (Strong Buy)
The fund IVV tracks the performance of the S&P 500 index, which comprises 500 of the largest publicly traded companies in the United States. It offers exposure to blue-chip stocks across multiple sectors and has historically delivered competitive returns compared to other large-cap benchmarks.
There is no five-year period in history where the S&P failed to give gains, per the MarketWatch article. The index recently hit an all-time high. It is up 10% this year, gained 32.3% in the past year and added 85% in the past five years.
Vanguard Total Stock Market ETF (VTI - Free Report) ) – Zacks Rank #2 (Buy)
Having an exposure to the overall stock market, irrespective of capitalization and style is an intriguing bet over the long term as it offers true diversification. Diversification is a way to win in an unstable market.
The underlying CRSP US Total Market Index representing nearly 100% of the U.S. investable equity market covering nearly 4,000 constituents across mega, large, small and micro capitalizations. The fund VTI charges 3 bps in fees and yields 1.37% annually. The fund is up 10.2% so far this year, jumped 31.2% past year and surged about 80% in the past five years.
SPDR Gold Shares (GLD - Free Report) ) – Zacks Rank #3 (Hold)
Gold has traditionally been seen as a safe haven in times of financial uncertainty. The SPDR Gold Shares ETF offers investors an effective way to incorporate gold into their portfolio without the need to physically own the metal.
GLD tracks the price of gold bullion, providing a hedge against inflation and currency devaluation. For investors looking to diversify their holdings and protect against systemic risks, GLD can be a golden choice. The fund is up 6.5% this year, added 10.7% past year and has jumped 66.5% in the past five years.
SPDR S&P Dividend ETF (SDY - Free Report) ) – Zacks Rank #2
Stocks that hike dividends continuously are safe bets. Over the last 90 years, dividends have accounted for more than 40% of the total return of the markets, per a research paper out from Morgan Stanley. From 1991 through 2015, non-dividend paying stocks earned only 4.18% returns per year while dividend-paying stocks significantly outperformed with a 9.7% average annual return, the paper highlighted.
The underlying S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend-yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years. SDY charges 35 bps in fees and yields 2.52% annually. The fund is up 4.7% this year, 8.4% past year and 31.7% in the past five years.
Technology Select Sector SPDR ETF (XLK - Free Report) ) – Zacks Rank #1
Technological innovations are part and parcel of the current era. We believe that no matter if the Fed hikes, pauses, stays the course, or cuts rates, tech investing will be in fine fettle due to the AI boom and the perception that the era of rock-bottom rates is over. Both tech and higher rates are the new normal, and investors are becoming accustomed to it.
The tech fund XLK charges 9 bps in fees and yields 0.71% annually. The fund has gained 11.4% this year, surged 44.8% past year and skyrocketed 182% in the past five years.