In this article, we discuss 10 best ETFs to buy in 2022 according to Reddit.
Exchange traded funds are trending on Reddit as retail investors move towards a passive method of navigating the stock market amid severe volatility. According to Morningstar, 2021 was a hot year for the passive investment sector, as passive investors accounted for about one fifth of the £8.5 trillion European investment funds market. This was a boost of 9.5% over the preceding year. Comparatively, there was a growth of only 2.1% in actively-managed investments over the period. These statistics are not surprising, since S&P Global data suggests that in a span of 15 years, about 90% of actively managed funds have underperformed their benchmarks.
Redditors are often known for their risky and daring bets in the stock market. However, even the most spontaneous of retail investors have pulled back from reckless navigation of this tumultuous market and seek out exchange traded funds that are managed by professionals to safeguard their money. Through these investments, Redditors are exposed to a mix of growth and value plays such as Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Exxon Mobil Corporation (NYSE:XOM).
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Our Methodology
We scoured the latest trending threads on the internet platform Reddit to assess the investor sentiment around exchange traded funds. We selected the ETFs that were most popular among Redditors. The ETFs listed below are discussed with regards to their top holdings.
Best ETFs to Buy in 2022 According to Reddit
10. Invesco QQQ Trust (NASDAQ:QQQ)
Invesco QQQ Trust (NASDAQ:QQQ) is an exchange traded fund that invests in innovation, tracking the growth-heavy NASDAQ-100 Index. As of May 31, the ETF has assets under management of $166.33 billion. Its holdings comprise investments in the augmented reality, cloud computing, big data, mobile payments, streaming services, and electric vehicles sectors.
The largest stock in Invesco QQQ Trust (NASDAQ:QQQ)’s portfolio is Apple Inc. (NASDAQ:AAPL), one of the Big Five US tech giants. The Apple stake makes up 12.53% of the ETF’s total holdings. On May 25, Loop Capital analyst Ananda Baruah maintained his Buy rating and a $180 price target on Apple Inc. (NASDAQ:AAPL), noting that although he still expects an increase in the iPhone revenue for the June quarter, the projections for the September and December quarters “remain low” as the company’s average prices continue to be “materially stronger” than the Street.
Among the hedge funds tracked by Insider Monkey, 131 funds were long Apple Inc. (NASDAQ:AAPL) at the end of March 2022, compared to 134 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway held the leading stake in the company, comprising about 891 million shares worth $155.5 billion.
Here is what Berkshire Hathaway has to say about Apple Inc. (NASDAQ:AAPL) in its Q4 2021 investor letter:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its year end market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
9. Vanguard Energy Index Fund (NYSE:VDE)
Vanguard Energy Index Fund (NYSE:VDE) is a passively managed exchange traded fund that aims to replicate the performance of a benchmark index that measures the return of companies in the energy space. As of April 30, the ETF holds 102 stocks and has total net assets worth $9.8 billion. Vanguard Energy Index Fund (NYSE:VDE) has a top ten holdings concentration of 66.1%.
The largest sub-sectors that Vanguard Energy Index Fund (NYSE:VDE) invests in include integrated oil and gas, exploration and production, refining and marketing, storage and transportation, and equipment and services. The leading position in Vanguard Energy Index Fund (NYSE:VDE)’s portfolio is taken up by Exxon Mobil Corporation (NYSE:XOM), an American multinational oil and gas corporation based in Irving, Texas.
Exxon Mobil Corporation (NYSE:XOM) has consistently raised its dividends for 39 years, making it a reliable dividend aristocrat to invest in. On April 27, the company declared a quarterly dividend of $0.88 per share, in line with previous. The dividend is payable on June 10, to shareholders of the company as of May 13. Exxon Mobil Corporation (NYSE:XOM) delivered on June 1 a dividend yield of 3.60%.
According to Insider Monkey’s Q1 data, 83 hedge funds held long positions in Exxon Mobil Corporation (NYSE:XOM), compared to 71 funds in the earlier quarter. Rajiv Jain’s GQG Partners owned the leading stake in the company, with 51.80 million shares worth $4.2 billion. The hedge fund boosted its hold on Exxon Mobil Corporation (NYSE:XOM) by 60% in Q1 2022.
Here is what Goehring & Rozencwajg Associates has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
8. Vanguard Total Stock Market Index Fund (NYSE:VTI)
Vanguard Total Stock Market Index Fund (NYSE:VTI) tracks the performance of the CRSP US Total Market Index. Following a passively managed, index-sampling strategy, the ETF invests in large, mid, and small-cap growth and value stocks. The minimal expense ratio of 0.03% minimizes net tracking error. The top 10 holdings of Vanguard Total Stock Market Index Fund (NYSE:VTI) as of April 30 comprised 24.20% of the overall portfolio. The fund invests in 4,112 stocks, with total net assets worth $1.2 trillion.
One of the largest securities in Vanguard Total Stock Market Index Fund (NYSE:VTI)’s portfolio is Microsoft Corporation (NASDAQ:MSFT). Jefferies analyst Brent Thill on May 23 maintained a Buy recommendation on Microsoft Corporation (NASDAQ:MSFT) but slashed the price target on the shares to $325 from $400. The analyst has lowered forecasts across 28 software companies due to stiffening economic headwinds and the threat of recession. He believes his target multiples could slip further if fundamentals continue to weaken.
Among the hedge funds tracked by Insider Monkey, 259 funds were bullish on Microsoft Corporation (NASDAQ:MSFT) at the end of March 2022, compared to 262 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management held the largest position in the company, comprising 27.8 million shares worth about $8.6 billion.
In addition to Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Exxon Mobil Corporation (NYSE:XOM), elite investors are piling into Microsoft Corporation (NASDAQ:MSFT).
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
7. Vanguard S&P 500 Value Index Fund (NYSE:VOOV)
Vanguard S&P 500 Value Index Fund (NYSE:VOOV) invests in the value stocks from the S&P 500 Index. The exchange traded fund closely tracks the returns of the S&P 500 Value Index, and it is feasible for long-term investors who need to grow their money. The ETF’s investments are focused on the financials, healthcare, industrials, and consumer staples sectors. As of April 30, Vanguard S&P 500 Value Index Fund (NYSE:VOOV) holds 448 stocks in its portfolio, with total net assets of $3.1 billion. The fund has a top 10 holdings concentration of 18.10%.
A notable stock in Vanguard S&P 500 Value Index Fund (NYSE:VOOV)’s portfolio is UnitedHealth Group Incorporated (NYSE:UNH), an American diversified health care company that provides consumer-oriented health benefit plans, Medicaid plans, and health insurance, in addition to other health management solutions.
On April 14, UnitedHealth Group Incorporated (NYSE:UNH) reported its Q1 financial results, posting earnings per share of $5.49, beating market consensus estimates by $0.14. The revenue of $80.15 billion rose 14.18% year-over-year, outperforming analysts’ predictions by $1.38 billion.
According to Insider Monkey’s database, 103 hedge funds placed long bets on UnitedHealth Group Incorporated (NYSE:UNH) at the end of Q1 2022, up from 96 funds in the last quarter. Boykin Curry’s Eagle Capital Management held the biggest stake in the company at the conclusion of the March quarter, with 2.90 million shares worth about $1.5 billion.
Like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Exxon Mobil Corporation (NYSE:XOM), UnitedHealth Group Incorporated (NYSE:UNH) is a top pick of smart investors.
Here is what Baron Durable Advantage Fund has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH) is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and healthcare services arm, Optum, which offers care delivery and other services. Shares increased 1.8% on good fourth quarter results with revenues up 12.5% year-over-year, operating margins of 7.5% and EPS up 78% while also reaffirming its 2022 guidance. We believe UnitedHealth leads the healthcare industry in innovation and execution as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
6. Vanguard 500 Index Fund (NYSE:VOO)
Vanguard 500 Index Fund (NYSE:VOO) invests in the S&P 500 Index, exposing shareholders to 500 of the largest US companies. The fund offers an expense ratio of 0.03% as of April 29. At the end of April 2022, Vanguard 500 Index Fund (NYSE:VOO)’s net assets equalled $760.1 billion and the top ten holdings represented 29% of the total portfolio. Information technology stocks account for 27.40% of the overall holdings of the fund.
One of the biggest names in Vanguard 500 Index Fund (NYSE:VOO)’s portfolio is Amazon.com, Inc. (NASDAQ:AMZN), the American multinational firm specializing in e-commerce, cloud computing, digital streaming, and artificial intelligence.
Morgan Stanley analyst Brian Nowak on June 1 reiterated an Overweight rating on Amazon.com, Inc. (NASDAQ:AMZN) but lowered the price target on the stock to $3,500 from $3,800. He slashed estimates across online ad and e-commerce companies and adopted a more conservative base case to reflect higher macro and micro unpredictability, the analyst told investors. He now expects about 13% and 16% year-over-year online ad growth and approximately 8% and 10% e-commerce growth in 2022 and 2023.
Among the hedge funds tracked by Insider Monkey, Jaime Sterne’s Skye Global Management held a prominent stake in Amazon.com, Inc. (NASDAQ:AMZN) at the end of March 2022, comprising 740,500 shares worth $2.4 billion. Overall, 271 hedge funds were bullish on the stock as of the conclusion of the first quarter of 2022.
Here is what Miller Value Partners Opportunity Equity has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:
“For frame of reference, Amazon (NASDAQ:AMZN) bottomed at the same valuation in the financial crisis (side note: Amazon bottomed at 4x EV/GP after the tech bubble burst)! So there’s historical precedent for the lows being in. We will see whether that holds true this time. Regardless, we think there’s significant upside over a 5-year time horizon. The one other topic I want to briefly address is our volatility. We hope to write something about the topic in more depth in the future, but we want our clients and prospective investors to understand our views on it. We think that volatility is significantly misunderstood. We believe it creates opportunities from which we can profit.”
5. Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS)
Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS) aims to track the performance of the FTSE Global All Cap ex US Index, which replicates the investment return of companies located outside the United States. Via a passively managed, index replication approach, the fund offers international exposure to emerging and developed markets. Majority of the companies held by Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS) belong to emerging markets, Europe, and Pacific. The fund invests in 7,881 stocks and as of April 30, the total net assets are $363.5 billion.
The largest holding in Vanguard Total Intl Stock Idx Fund (NASDAQ:VXUS)’s portfolio is Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), a provider of integrated circuits, chips, and related semiconductor devices.
On April 4, Morgan Stanley analyst Charlie Chan categorized Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a “catalyst driven idea” as he expects its Q2 guidance to exceed present Street consensus despite inventory correction concerns in the sector. He reiterated an Overweight rating and a NT$780 price target on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) heading into the company’s Q1 results on April 14, which came in above market estimates.
According to Insider Monkey’s Q1 data, 81 hedge funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), up from 72 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held a prominent position in the company, comprising over 9 million shares worth $945 million.
Here is what Wedgewood Partners has to say about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2022 investor letter:
“Taiwan Semiconductor pulled back on geopolitical concerns and periodic market fears about the end of the “cycle” in semiconductors. First, we think the Company might be one of the most – if not the most – important Companies in the world. Taiwan Semiconductor has a near-monopoly on semiconductor processing at advanced nodes, which makes it irreplaceable to customers such as Apple, AMD, NVIDIA, Mediatek, Amazon, and even Intel. Second, much less important manufacturers have more direct geopolitical risk than Taiwan Semiconductor, yet they trade at substantial premiums – both multiple and market cap. For example, Tesla is a heavy manufacturer of only about 1 million automobiles with significant production capacity located in the heart of China, yet it trades at double the market cap of Taiwan Semiconductor. Third, while it is hard to know when the current semiconductor “cycle” will slow or end, we see very few signs of it, as Taiwan Semiconductor continues to generate bookings well in excess of its current capacity – unlike any previous cycle. Taiwan Semiconductor traded to levels that are much too pessimistic given its competitive positioning and opportunity for growth driven by a more robust semiconductor cycle, driven by high-performance computing. As such, we added to our position during the quarter.”
4. Schwab U.S. Dividend Equity ETF (NYSE:SCHD)
Schwab U.S. Dividend Equity ETF (NYSE:SCHD) closely tracks the total return of the Dow Jones U.S. Dividend 100 Index. Due to its low expense ratio of only 0.06%, the fund offers tax efficiency. At the end of May 2022, Schwab U.S. Dividend Equity ETF (NYSE:SCHD)’s total net assets came in at $36.6 billion. As of April 30, the ETF offers a distribution yield of 3%.
One of the top holdings of Schwab U.S. Dividend Equity ETF (NYSE:SCHD) is Pfizer Inc. (NYSE:PFE), an American multinational pharmaceutical and biotechnology corporation. On May 23, SVB Leerink analyst David Risinger initiated coverage of Pfizer Inc. (NYSE:PFE) with a Market Perform rating and a $55 price target. The analyst is bullish on the company’s plans to increase innovation, but struggles to forecast the magnitude and durability of pandemic-related profits beyond 2022.
Pfizer Inc. (NYSE:PFE) reported on April 28 a $0.40 per share quarterly, in line with previous. The dividend is payable on June 10, to shareholders of record on May 13. Pfizer Inc. (NYSE:PFE)’s dividend yield on June 1 came in at 3.06%.
According to Insider Monkey’s database for the first quarter of 2022, 79 hedge funds were long Pfizer Inc. (NYSE:PFE), compared to 83 funds in the earlier quarter. Cliff Asness’ AQR Capital Management is a significant shareholder of the company, with 10.70 million shares worth $554.12 million.
Here is what ClearBridge Investments Value Equity Strategy has to say about Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.”
3. iShares Core S&P 500 ETF (NYSE:IVV)
iShares Core S&P 500 ETF (NYSE:IVV) seeks to track the investment results of an index comprising the largest U.S. equities. As of March 31, the 1-year returns for iShares Core S&P 500 ETF (NYSE:IVV) were 15.61%, whereas the benchmark returned 15.65%. The fund was established May 15, 2000 and has total net assets exceeding $299 billion as of June 1. The expense ratio clocks in at 0.03%.
One of the largest holdings of iShares Core S&P 500 ETF (NYSE:IVV) is Tesla, Inc. (NASDAQ:TSLA), the American EV manufacturer. On April 20, Tesla, Inc. (NASDAQ:TSLA) reported earnings for Q1 2022, announcing an EPS of $3.22 and a revenue of $18.76 billion, above Street consensus by $0.95 and $917.76 million, respectively.
According to Insider Monkey’s Q1 database, 80 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), compared to 91 funds in the preceding quarter. Cathie Wood’s ARK Investment Management is a leading stakeholder of the company, with a position worth $1.7 billion.
Here is what Baron Fifth Avenue Growth Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“During the first quarter, we bought back shares in Tesla, Inc., which designs, manufactures, and sells electric vehicles, solar products, energy storage solutions, and batteries. We believe that despite the run in the stock over the last few years, Tesla presents a favorable risk/reward profile and remains a Big Idea with only about 1% market share of the automotive market. Since we bought the stock during the first quarter, shares increased 27.1%, despite a complex supply-chain environment, on continued revenue growth and record profitability. Robust demand and operational optimization allow the company to offset inflationary pressures while vertical integration provides flexibility around supply bottlenecks. Moreover, we expect new localized manufacturing capacity to drive additional efficiencies while software initiatives, including the autonomous driving program, are accelerating, offering valuable optionality to the stock.”
2. Invesco DB Oil Fund (NYSE:DBO)
Invesco DB Oil Fund (NYSE:DBO) seeks to track the changes in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return, as well as the interest income from its portfolio of mainly US Treasury securities and money market income, apart from expenses. It operates as a rules-based index comprising futures contracts on light sweet crude oil. Invesco DB Oil Fund (NYSE:DBO) is suitable for investors with a huge risk appetite, due to its speculative nature and underlying futures contracts in extremely volatile markets.
Invesco DB Oil Fund (NYSE:DBO) was established in 2007, and it offers short selling and options trading on WTI crude futures. The total expense ratio is 0.77%, consisting of a 0.75% management fee and a futures brokerage fee of 0.02%.
1. Invesco DB Agriculture Fund (NYSE:DBA)
Redditors were bullish on Invesco DB Agriculture Fund (NYSE:DBA), which aims to track the positive and negative changes in the level of the DBIQ Diversified Agriculture Index Excess Return, as well as the income from the fund’s holdings comprising US Treasury securities, money market funds, and T-Bill ETFs.
Invesco DB Agriculture Fund (NYSE:DBA) invests in futures of corn, soybeans, sugar, coffee, live cattle, cocoa, lean hogs, wheat, feeder cattle, and cotton. The ETF offers a total expense ratio of 0.93%, comprising a management fee of 0.85% and estimated futures brokerage expenses of 0.09%.
You can also take a look at 20 Safe Dividend Stocks to Quit Your 9 to 5 Job and 10 Growth ETFs to Buy Now.
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Disclosure: None. 10 Best ETFs to Buy in 2022 According to Reddit is originally published on Insider Monkey.
