While risk-takers will eschew broader-scoped exchange-traded funds (ETFs) for the glory (and profits) of individual stocks, ETFs are a relevant component of any investing strategy. While the profit potential is greatest with a bet on a single company, the opposite is also true. Over the long run, the law of averages makes choosing the best Vanguard ETFs particularly compelling.
This is especially true if you’re interested in speculative industries. For example, junior gold-mining stocks appeal to many investors because the underlying asset is historically undervalued. All too often, however, junior gold miners fail for reasons unrelated to bullion’s spot price. Perhaps a promising project no longer appears that way upon closer inspection. A sudden funding loss could also derail the best plans and intentions.
Vanguard ETFs to buy help mitigate potential losses by spreading the risk across high-quality names. Furthermore, many, if not most investors have day jobs. Experienced fund managers oversee Vanguard ETFs, deciding which names go in, and more importantly, which ones go out. Instead of having to hawk over your portfolio, let a professional do the legwork!
Although there’s no greater thrill than finding a “ten-bagger,” it’s consistency that wins championships. Toward that end, here are the three best Vanguard ETFs to buy right now!
Best Vanguard ETFs to Buy: Vanguard FTSE Pacific ETF (VPL)
Unless you’ve deliberately pulled the plug on all media, you know that the Asia-Pacific region is at a critical juncture. With North Korea saber-rattling (again), President Donald Trump is currently visiting the area and reasserting American influence. Among the vast Asian markets, I believe Japan has the best chance to offer outstanding profitability for investors. That would suit the Vanguard FTSE Pacific ETF (NYSEARCA:VPL) just fine.
An Asia-centric fund, the VPL is heavily vested toward Japanese markets. This is important for a number of reasons. First, the North Korean crisis secured current Prime Minister Shinzo Abe’s snap election victory, enabling him to further his mandate. Second, Japan needs new, potentially offensive weapons, to counter North Korea, which adds a military layer to its economy. Third, Abe will aggressively push the so-called third arrow of “Abenomics” — structural reform.
As I argued previously for InvestorPlace, Japan has a revolving door policy with its leadership. With Abe, the nation has enjoyed a level of stability not seen in quite some time. That bodes very well for the VPL, making it one of the best Vanguard ETFs to buy right now.
However, the long-term potential for VPL is also evident. Japan has been long resistant to change, but it now sees how its stubbornness can cause challenges. With the Abe administration proposing hard, but necessary policies, Japan and the VPL can get back on the road to profitability.
Best Vanguard ETFs to Buy: Vanguard Emerging Markets Stock Index Fd (VWO)
Compared to almost all other Vanguard ETFs, the Vanguard Emerging Markets Stock Index Fd (NYSEARCA:VWO) is untouchable. Year-to-date, the VWO is up 26%, with only the Vanguard Information Technology ETF (NYSEARCA:VGT) running higher.
Its dominance shouldn’t come as any surprise. Levered mostly toward Chinese stocks, VWO features hot-rod names like Tencent Holdings Ltd (OTCMKTS:TCEHY) and Alibaba Group Holding Ltd (NYSE:BABA).
But the real reason I love VWO is that it’s a safer way to invest in a sexy, speculative sector. Of course, everyone loves China’s technology potential, and its vast human resources. But many investors are also keen on India, particularly because forward-thinking Prime Minister Narendra Modi leads his country. Additionally, you have exposure to resource giant South Africa, our southern neighbor Mexico, and South American powerhouse Brazil.
Everyone loves them some emerging markets. But actively managing this vast region is a gargantuan task. For instance, labor strikes create uncertainty and volatility for South African mining companies. Inflation and political corruption are constant scourges in Brazil. The North Korea missile crisis forces awkward conversations with China. Finally, we all know about our not-so-friendly relationship with Mexico.
Opportunities exist, which is why I believe in VWO. Simultaneously, buying the VWO ETF gives me greater confidence that market professionals are actively monitoring emerging market news. Essentially, it’s a way to have your cake and eat it too.
Best Vanguard ETFs to Buy: Vanguard Small-Cap Index Fund (VB)
Among the ETFs to buy mentioned on this list, the Vanguard Small-Cap Index Fund (NYSEARCA:VB) is a rather middling name: not too hot, not too cold. On a YTD basis, VB is up a reasonably solid 12%. However, the intractably boring and unoriginal SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is actually kicking VB’s rear at 16% YTD.
Still, I believe in VB due to macro trends. In order to survive in today’s economy, you have to be focused and agile. That lends well to smaller firms that don’t have onerous overhead costs lingering from a bygone era. A classic example is General Electric Company (NYSE:GE). The company is a jack-of-all-trades but master of none. Even its generous dividend yield can’t save it if company shares keep falling the way that it has.
But as much as I believe in the potential for small-capitalization companies, finding the right one to buy is a hassle. This is where Vanguard ETFs forward their value proposition. I don’t necessarily have the time to conjure up a portfolio of profitable small-caps. Vanguard does, and they’ve been quite good at it, placing high-flyers Teleflex Incorporated (NYSE:TFX) and Take Two Interactive Software Inc (NASDAQ:TTWO) in the fund’s top holdings.
Over the next several years, I see fewer major conglomerates, and more nimble companies succeeding on innovation, not size. VB is doing well enough right now, but its future potential is what makes it one of the best Vanguard ETFs to buy!
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
