I have been through countless economic and market challenges during my professional career. My first was the stock market crisis of 1987 when I was in London. Then, there was the brief repeat in the fall of 1988.

Each of the economic, market and security challenges has its own root causes and solutions — and the same is true for the novel coronavirus and resulting lockdowns. But what I do ahead of and during each challenge matters. I provide portfolio allocations that are set up to survive each mess along the way.

Now, my specialties involve economic and market data and developments, and in turn the best individual securities from the stock, bond and other markets to capitalize on those developments for safer growth and income. This is what I showcase in my Profitable Investing — now past its 30th year of publication.

However, I also understand that individual investors need and want exchange-traded funds.

It may be that portfolios are in smaller sums, or are part of administered qualified retirement accounts. And many of these accounts are domiciled in the major fund companies. The Vanguard Group is one of the largest fund management companies with over $6 trillion in assets under management (AUM). It is one of the leaders in the U.S. market, providing individual investors a wide array of funds including ETFs.

Inside my Profitable Investing I have a collection of model mutual fund portfolios including specific ones for individual fund families including Fidelity and Vanguard. I do this to specifically guide subscribers who want or need to stay within fund families.

And in all of the mutual fund portfolios, I provide an allocation to specific funds which match up to my main portfolios of individual securities in allocations and strategies.

Here are six specific Vanguard ETFs I’m recommending now:

• High Dividend Yield ETF (NYSEARCA:VYM)
• Real Estate ETF (NYSEARCA:VNQ)
• Utilities ETF (NYSEARCA:VPU)
• Information Technology ETF (NYSEARCA:VGT)
• Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT)
• Tax-Exempt Bond ETF (NYSEARCA:VTEB)

Stocks, Fixed Income and Cash

To start, I have a current allocation of 56% in stocks, 44% in fixed income — and included in that 44% is 11% in cash. I know that this allocation is different than the 60/40 balance of stocks to bonds which is typical for many managers. But, I have been a bit more conservative ahead of the current lockdown. I’ve been looking for opportunities in the bond markets for not just income, but growth.

I’ll start with the stock allocations. My continued judgement is that the U.S. remains the prime market of the globe. The U.S. has been hit hard by the lockdowns — but unlike the rest of the major markets — the U.S. has the Federal Reserve which is throwing trillions at the economy and markets. And President Donald Trump’s administration got Congress to add trillions more.

So, my allocations are highly focused on the U.S. markets right now. This is different from my decades of global focus while I was in banking and asset management.

Vanguard ETFs for U.S. Stocks

That said, the starting point for Vanguard ETFs is the High Dividend Yield ETF (NYSEARCA:VYM). This is an indexed ETF focused on U.S.-listed stocks. Its focus group pays higher average dividends than nearly all other stocks in the U.S. market.

This is my more measured approach to the S&P 500. The higher weightings on dividends provides a lesser risk to downturns as well as volatility.

VYM and S&P 500 Total Return

You’ll note that over the past ten years, the Vanguard ETF has generally provided more consistent total returns including dividend income. And in 2018 during the severe downturn in the S&P 500, the Vanguard ETF held up much better.

But Vanguard lagged in 2019 while the market drove toward more aggressive stocks — particularly in the technology sector. My view is that I want to achieve a lower-volatility and lower-risk return over time, and not to have a base which is too heavy on a particular sector.

Vanguard ETFs for Real Estate

Next in the stock allocation is real estate investment trusts (REITs). This is done with the Vanguard Real Estate ETF (NYSEARCA:VNQ). REITs have recently come under fire with lockdowns, but only specific sectors, like retail, are hurting. With low inflation, funding costs are reduced for overall sustained profitability for most in the market.

And REITs continue to provide lower risk as they are mainly focused on U.S.-centric assets away from global economic troubles. As noted above, low inflation and largely dependable revenues feeds more valuable dividend income.

VNQ and S&P 500 Total Return

For the trailing 24 months, the Vanguard REIT ETF was generally outpacing the S&P 500 on a very consistent basis — especially during some of the selloffs in late 2018. VNQ dropped in March during the market-wide selloff, but it has been returning as more investors eye the fundamentals of the REIT market.

With a dividend yield of 3.7%, the ETF out pays the S&P 500 by a significant margin. With consistency based on real assets and defended dividend income, REITs in this Vanguard ETF are a great way to achieve measured growth with higher income.

Utilities

Then I move to another traditionally defensive source for growth and income in the U.S. market with utilities. For this I like the Vanguard Utilities ETF (NYSEARCA:VPU). Like REITs, U.S. utilities are insulated from global woes and continue to capitalize on the reliability of the country, even during the lockdowns.

The best utilities are combinations of regulated local services and unregulated wholesale businesses. The combination of dependable revenues, profit margins and added growth and income from additional unregulated operations makes for a great way to generate steady-to-rising income with growth over time.

VPU and S&P 500 Total Return

The return for VPU over the trailing 24 months is 14.8%, which had been consistently outperforming the S&P 500. And utilities continue to do much better than the general stock market, even during the chaos of this year.

Technology

Now I come to the more exciting part of the U.S. market in information technology. Technology has always been a big growth engine for the U.S. economy, and the stocks in this segment reflect optimism for higher returns. I accomplish this allocation with the Vanguard Information Technology ETF (NYSEARCA:VGT).

Technology is the alchemy of the market. Whether products come from silicon or the ether in the minds of apps and software developers, gold and profits can be achieved in momentous amounts. But not all work, and there are always new products and services making for volatile markets.

So, while investors need exposure, it should come as part of a broader portfolio.

VGT and S&P 500 Total Return

The technology market has been a good one, and VGT has turned in a return over just the past trailing five years alone of 143%. This return outpaces the S&P 500 nearly three to one. And technology has become one of the go-to sectors — continuing to outpace the general market.

Corporate Bonds

Fixed income in the U.S. had its selloff in March only to surge back. The U.S. has very low inflation, with very few threats for some time to follow. This has led to lower yields and higher bond prices overall. But there are two sectors which I continue to advocate for investors in corporate bonds and municipal bonds.

Corporate bonds are gaining immense traction with Fed buying, as well as more institutional investors doing their credit analysis of businesses and bolstering their buying resulting in higher bond prices.

My allocation to this market through Vanguard ETFs is in the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT). This ETF has returned 24.4% over the trailing five years  years — significantly outpacing the general U.S. bond market as tracked by the Bloomberg Barclays U.S. Aggregate Index.

VCIT and Bloomberg Barclays U.S. Aggregate Index Total Return

Vanguard ETFs for Municipal Bonds

Then for municipal bonds I have the Vanguard Tax-Exempt Bond ETF (NYSEARCA:VTEB). Municipal bonds have been gaining like corporates on the growing economy ahead of the lockdowns. Tax revenues are up, aiding credit of issuers. Low inflation aids bonds as well. And issuance has been muted as many issuers have not had the need or the political will to sell more bonds.

VTEB and Bloomberg Barclays U.S. Aggregate Index Total Return

VTEB was consistently outperforming the U.S. Aggregate Bond Index over the past trailing five years. That reversed during the March 2020 selloff —  only to sharply reverse for all segments of the bond markets. Municipal bonds have the best credit history of any bond sector besides U.S. Treasury bonds.

And while some are questioning the budget strife that is and will challenge state and local authorities, Fed lending and municipal bond buying will go far for this market.

Note, even if you invest in qualified investment accounts, I still recommend the tax-free ETF for total return and not just for tax-free income as the municipal bond market is a value right now.

Neil George was once an all-star bond trader, but now he works morning and night to steer readers away from traps — and into safe, top-performing income investments. Neil’s new income program is a cash-generating machine … one that can help you collect $208 every day the market’s open. Neil does not have any holdings in the securities mentioned above.