There are a few things that go into making a great long-term portfolio holding. ETFs should be broadly diversified around a market or theme. They should come with ultra-low expense ratios.
And you should easily be able to explain what they do and how they pick stocks. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Vanguard is very good at this. They largely avoid getting into thematic ideas and focus on what they do best, which is to offer cheap index funds tied to popular markets, sectors, and styles.
There are two Vanguard ETFs in particular that are ideally built to be long-term holdings but for different reasons. The Vanguard Total Stock Market ETF (NYSEMKT: VTI) can serve as the foundation of a diversified portfolio. Its objective is simple: Target the entire investable U.S. equity universe.
It owns roughly 3,500 companies of all sizes across every industry and sector. Many people prefer the Vanguard S&P 500 ETF (NYSEMKT: VOO) as a core position, and that's certainly defensible. I prefer to own large-, mid-, and small-cap stocks for the inevitable periods where market leadership changes.
The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) takes a more conservative approach by targeting well-established companies with at least 10 consecutive years of dividend growth. These companies tend to be more mature with healthier balance sheets. Plus, the dividend income provides a source of return in addition to the long-term capital growth potential.
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