3 Vanguard ETFs I’m Considering Buying Right Now

I’ve been consistently transitioning my own portfolio toward companies and sectors that have a much more defensive tilt in recent months. 

There are many reasons for this shift. But with increased uncertainty around trade and monetary policy continuing to hit the valuations of the most highly-priced stocks in the market, the rotation we’ve seen form in recent months is one I’ve thought has been a long time coming.

Of course, Trump’s recently implemented tariff policy has provided the key reason for many investors to hit the ask on certain companies and take profits. But it’s also true that long-term investors now have a reason to focus on value, or on sectors with much more stable underlying business models. And should the buying pressure in these sectors continue for a meaningful period of time, I do think it’s possible we could be in the early innings of a real rotation toward certain defensive sectors and areas of the economy. 

Aside from picking individual stocks which can provide investors with very specific exposure to specific sectors and trends, passive investors or those looking for vehicles to play broader trends may want to consider certain exchange traded funds (ETFs). One top ETF provider I think gives investors some of the broadest and highest-quality options in this space is Vanguard.

So, without further ado, here are three top Vanguard ETFs I think are great buying opportunities right now. 

Vanguard Utilities Index Fund ETF (VPU)

One of the most defensive sectors in the market most look to for cash flow stability in times of crisis is the utility sector. There’s good reason for this. Utility companies provide essential services that consumers (who don’t want their lights or heat to be shut off) will have to pay.

Thus, in a down market, utility companies can continue to provide some of the most stable earnings and cash flow growth profiles out there. This business model resiliency is something that tends to be overlooked in bull markets. But when the bullets really start to fly, investors start taking a much closer look at ETFs such as the Vanguard Utilities Index Fund ETF (VPU). 

Currently, VPU is one of my most significant holdings, and my plan is to continue to add to this holding over time. With a dividend yield right around 3% per year, and a miniscule expense ratio of 0.09%, the upside exposure this fund provides to a very recession-resistant sector is something I’ll want more exposure to if things continue to sour, not less. 

Vanguard Russell 1000 Value ETF (VONV)

In the world of value investing, many investors may opt to look at only the largest names in a particular sector first, for various reasons. There’s a significantly lower beta, or risk factor, involved in putting capital to work in companies which have larger market capitalizations. That’s because, while it’s always possible for a given company to go under, those with the largest market caps tend to mature and decline over longer periods of time. When one considers most of the dramatic declines over short periods of time, these tend to happen more in the small cap world.

With the Russell holding many of the smallest companies in the market, this isn’t the first place most investors look to in times of distress. But the Vanguard Russell 1000 Value ETF (VONV) is one exception to this rule, given that this index ETF holds some of the most balanced defensive growth stocks in the small-cap world.

The fund’s holdings are focused on defensive sectors such as consumer staples and healthcare companies, utilizing a number of value factors to pick the companies that are best-positioned to weather economic storm clouds.

Thus, for investors who still want growth upside in a market that could turn around at any point (the market tends to trend higher over most 10-year long periods of time), this may be a fund to consider gaining exposure to right now. 

Vanguard Consumer Staples Index Fund ETF (VDC)

In a risk-off environment in which many investors are increasing their recession probabilities, such investors may rightly be wary of investing in consumer discretionary companies – those that provide goods that are one-off purchases or may be based on how a given consumer is feeling at a point in time. Indeed, when stock prices are rising and consumers see the value of their 401(k) portfolios increase on a daily basis, the wealth effect associated with these increases can lead to a boom in consumer discretionary stocks – which is largely what we’ve seen over the past 15 years.

However, in down markets, many investors start to focus in on consumer staples companies. These are the firms that provide the household essentials we all need to just survive. 

The Vanguard Consumer Staples Index Fund ETF (VDC) is one top option I think investors may want to consider for exposure to companies like Procter & Gamble, Johnson & Johnson, Coca-Cola and Walmart. These are among the fund’s top holdings, and reflect a consortium of companies aimed at all consumer groups.

With an expense ratio of just 9 basis points (0.09%) and an annual dividend yield of 2.4%, this is a top ETF I think is worth considering for those who simply do not know what is ahead. I’m in this camp. 

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