Index funds continue to be solid investments. With index funds, investors can gain broad exposure to the stock market or a particular economic sector or industry. This can help to lessen volatility and risk, and lead to big gains over the long-term. While markets around the world remain volatile, many of them have risen so far in 2023 as certain sectors recover after a bruising 2022. This presents an opportunity for investors to take positions in index funds now in order to ride the recovery as stocks gather steam and their momentum increases. Index funds’ fees can be expensive, so investors should become aware of funds with relatively low fees. Here are three index funds to buy in March.
|VOO||Vanguard 500 Index Fund||$356|
|VGK||Vanguard FTSE Europe ETF||$59|
Invesco QQQ Trust Series 1 (QQQ)
The technology-laden Nasdaq index has been the best performer among the three best-known American stock indexes so far in 2023. After falling more than 30% in 2022, the Nasdaq has risen 7.4% so far this year as tech stocks stage a comeback. And what better way to ride the recovery of tech than by owning the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) index fund? The “Q” or “Triple Q,” as the exchange-traded fund (ETF) is known, tracks the movements of the Nasdaq 100 index that is comprised of the 100 largest companies listed on the Nasdaq exchange.
In 2023, the QQQ ETF is up 10%, mirroring the gains of the Nasdaq 100. With this fund, investors get exposure to all the largest tech titans, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and more.
The fund, which has been around since the height of the dotcom stock craze in 1999, charges a fee of 0.20%, which is about average for an ETF of its size. For investors who want broad exposure to best-in-class technology stocks, the QQQ is the gold standard.
Vanguard 500 Index Fund (VOO)
Another index worth tracking is the S&P 500, which is made up of 503 of the largest publicly traded companies in the U.S. The S&P 500 has small, mid-sized and large-cap stocks. Consequently, it is widely viewed as the benchmark U.S. stock index and serves as a barometer for the health of all American stocks. After falling nearly 20% in 2022, the S&P 500 index has gained 1.4% since the start of January. The Vanguard 500 Index Fund (NYSE:VOO) is an ETF that tracks the S&P 500.
Many analysts recommend buying ETFs that track the S&P 500 index. In fact, VOO is one of the few ETFs that the Oracle of Omaha, Warren Buffett, holds in his own stock portfolio. There are other advantages to owning Vanguard funds, including its affordable fees which are among the lowest in the industry.
The VOO ETF currently charges an expense ratio of only 0.03%, which is about as low as investors are going to find. The fund’s major holdings include Amazon (NASDAQ:AMZN), Berkshire Hathaway (NYSE:BRK.A / NYSE:BRK.B) and UnitedHealth Group (NYSE:UNH).
Vanguard FTSE Europe ETF (VGK)
Foreign stocks, especially those in Europe, have also outperformed U.S. stocks this year. After badly trailing U.S. equities for more than a decade, European stocks are being bought by investors who are looking abroad for cheaper stocks as U.S. markets continue to gyrate. So far in 2023, the Vanguard FTSE Europe ETF (NYSE:VGK) is up 5%. The expense ratio of the VGK fund is a little higher than my other two picks at 0.11%, but its expense ratio is still lower than most comparable funds.
With the VGK fund, investors get exposure to leading European companies such as Nestle (SWX:NESN), Novartis (SWX:NOVN) and Shell (NYSE:SHEL). It’s an eclectic mix that covers most of the major publicly traded corporations throughout the continent. With European stocks’ performance badly lagging U.S. equities over the last ten years, VGK’s long-term performance doesn’t appear that impressive (VGK is up about 5% in the last decade). However, with European stocks back in vogue, now is the time for investors to ride its recovery.
On the date of publication, Joel Baglole held long positions in AAPL, MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.