In this article, we discuss the 5 best index funds popular among Reddit investors. If you want to read about other index funds gaining attention on Reddit, go to 10 Best Index Funds Popular Among Reddit Investors.
5. Vanguard Developed Markets Index Fund (NYSEARCA:VEA)
Net Assets: $146.07 billion
The Vanguard Developed Markets Index Fund (NYSEARCA:VEA) is an ETF founded in 2007. The fund replicates the performance of the FTSE Developed All Cap ex US Index. The index includes more than 4,100 small, medium and large-cap stocks belonging to various industries and is based in Canada, major European markets, and the Pacific region.
The Vanguard Developed Markets Index Fund (NYSEARCA:VEA) offers a dividend yield of 3.69% as of August 24. Experts term the ETF as well diversified in terms of its geographic and industrial exposure. The possibility of a recession looming in the U.S. makes this index fund an attractive investment opportunity among Reddit Investors.
The ETF provides 52.1%, 36.6%, and 10.5% exposure to the European, Pacific, and North American market, respectively. In terms of countries, the fund’s weighted exposure is the highest in Japan at 20.6%, followed by the UK and Canada at 13.6% and 10.5%, respectively. Experts believe that in terms of P/E multiple, the benchmark index of the ETF is trading at a discount of over 30% against the S&P 500 Index.
4. Invesco QQQ Trust (NASDAQGM:QQQ)
Net Assets: $174.32 billion
The Invesco QQQ Trust (NASDAQ:QQQ) is an ETF that tracks the performance of the NASDAQ Composite Index.
The Invesco QQQ Trust (NASDAQ:QQQ) has rallied as much as 20% since its lows of mid-June 2022. Some experts believe that such short-term rallies are common in a bear market and should be considered a return to a bull market. The NASDAQ Composite Index has usually been termed a tech-heavy index, as nearly 50% of the index’s exposure is to the technology sector.
The Fund remains popular among Reddit investors as it has notable names in its portfolio. Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Tesla, Inc. (NASDAQ:TSLA) are the four biggest constituents of the ETF and occupy 33.3% of the portfolio. Meanwhile, the top 10 holdings take up 52.8% of the ETF. Due to its high-beta nature, the Invesco QQQ Trust (NASDAQ:QQQ) has taken a median time of two-and-a-half years to rebound from its bottom to its peak.
3. Vanguard Total Intl Stock Idx Fund (NYSEARCA:VXUS)
Net Assets: $353.94 billion
The Vanguard Total Intl Stock Idx Fund (NYSEARCA:VXUS) is an ETF that tracks the performance of the FTSE Global All Cap ex US Index. The index tracks the performance of publicly listed companies located in developing and developed markets outside the U.S. The ETF has a modest annual expense ratio of 0.07% and comprises more than 7,800 small, medium, and large-cap stocks spread across 46 countries. Redditors think that a large portfolio in terms of the number of holdings diversifies the risk significantly for any investor.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the biggest holding of the index fund, representing 1.5% of the overall portfolio. Furthermore, the top 10 holdings of the ETF include some notable brands like ASML Holding N.V. (NASDAQ:ASML) and Toyota Motor Corporation (NYSE:TM). The Vanguard Total Intl Stock Idx Fund (NYSEARCA:VXUS) also provides exposure to high-risk and high-reward offerings in emerging markets.
2. SPDR S&P 500 ETF Trust (NYSEARCA:SPY)
Net Assets: $373.18 billion
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is an ETF that tracks the performance of the globally renowned S&P 500 Index. The ETF came into being in 1993 and has an annual gross expense ratio of 0.0945%.
The S&P 500 has staged a strong recovery from its lows in mid-June. This has been due to a strong Q2 2022 earnings season and an improvement in the macroeconomic outlook. July inflation came in below expectations, giving rise to the hope that the Federal Reserve will not be as hawkish with interest rate hikes. Observers now anticipate a rise of only 50 basis points during the next monetary policy meeting in September 2022. Meanwhile, the prior outlook was for a 0.75% interest rate hike. Any significant interest rate hike would dampen the growth outlook of the economy due to depressed demand.
The SPDR S&P 500 ETF Trust’s (NYSEARCA:SPY) dividend yield stands at 1.4% as of August 24. Furthermore, the fund’s estimated EPS growth for the next 3-to-5 years stands at 12.18%. Apple Inc (NASDAQ:AAPL) is the fund’s biggest holding, representing 7.49% of the portfolio value.
1. Vanguard Total Stock Market Index Fund (NYSEARCA:VTI)
Net Assets: $1.22 trillion
The Vanguard Total Stock Market Index Fund (NYSEARCA:VTI) is an ETF that tracks the performance of the benchmark CRSP US Total Market Index, which comprises 4,076 small, medium, and large-cap stocks that cover the complete investable universe of the U.S. equity market.
The fund is popular on Reddit due to its significantly low expense ratio. The Vanguard Total Stock Market Index Fund (NYSEARCA:VTI) has an expense ratio of 0.03%, which substantially reduces the aspect of tracking errors. Meanwhile, the expense ratio of other similar funds, on average, stands at 0.80%. The top 10 holdings of the ETF represent 22.47% of the portfolio value. Some of the notable stocks included in the portfolio are Apple Inc (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA).
The Vanguard Total Stock Market Index Fund (NYSEARCA:VTI) offers a dividend yield of 1.47% as of August 24. Over 80% of the ETF’s portfolio replicates the SPDR S&P 500 ETF Trust, while the remaining 20% provides exposure to mid and small-cap companies.
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