In this article, we will look at the 5 best index funds to diversify your portfolio. If you want to read about the benefits of investing in index funds, you can go directly to the 10 Best Index Funds to Diversify Your Portfolio.
5. Vanguard Russell 2000 ETF (NASDAQ:VTWO)
Yield (TTM): 1.36%
The Vanguard Russell 2000 ETF (NASDAQ:VTWO) tracks the performance of the Russell 2000 Index and invests in growth and value stocks of small-cap companies operating across a diverse range of sectors including healthcare, financial, industrial, and technology, among others. The fund uses a full replication technique. The ETF has a top 10 holdings concentration of 2.71%, an expense ratio of 0.10%, and a trailing twelve-m0nth yield of 1.36%.
One of the top 10 holdings of the Vanguard Russell 2000 ETF (NASDAQ:VTWO) is Texas Roadhouse, Inc. (NASDAQ:TXRH). On July 29, Deutsche Bank analyst Brian Mullan raised his price target on Texas Roadhouse, Inc. (NASDAQ:TXRH) to $97 from $91 and reiterated a ‘Buy’ rating on the shares.
As of June 30, Millennium Management owns over 1 million shares of Texas Roadhouse, Inc. (NASDAQ:TXRH) and is the dominant shareholder in the company. The investment covers 0.04% of Israel Englander’s 13F portfolio.
4. SPDR S&P 500 Trust ETF (NYSEARCA:SPY)
Yield (TTM): 1.48%
The SPDR S&P 500 ETF (NYSEARCA:SPY) invests in growth and value stocks of large-cap companies and tracks the performance of the S&P 500 Index. The fund employs a full replication technique. The fund has an expense ratio of 0.09% and a trailing twelve-month yield of 1.48%. The fund has a top 10 holdings concentration of 28.25% and its investments are spread across the healthcare, consumer cyclical, utilities, and consumer defensive segments.
One of the top holdings of the SPDR S&P 500 ETF (NYSEARCA:SPY) is Johnson & Johnson (NYSE:JNJ). On July 20, Citi analyst Joanne Wuensch revised her price target on Johnson & Johnson (NYSE:JNJ) to $201 from $205 and reiterated a ‘Buy’ rating on the shares.
As of June 30, GQG Partners owns over 6.56 million shares of Johnson & Johnson (NYSE:JNJ) and is the leading shareholder in the company. The fund’s stake is valued at $1.16 billion and the investment covers 2.86% of Rajiv Jain’s 13F portfolio.
Mayar Capital named a few stocks in its second-quarter 2022 investor letter, one of which was Johnson & Johnson (NYSE:JNJ). Here is what the firm had to say:
“J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.
To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…” (Click here to see the full text)
3. Vanguard Total Stock Market ETF (NYSEARCA:VTI)
Yield (TTM): 1.49%
The Vanguard Total Stock Market ETF (NYSEARCA) tracks the performance of the CRSP US Total Market Index and uses an indexing investment approach. The fund invests in growth and value stocks of micro-cap, small-cap, mid-cap, and large-cap companies. The fund has a top 10 holdings concentration of 23.71% and has investments across a diverse range of sectors including technology, consumer cyclical, healthcare, and energy. The fund has an expense ratio of 0.03% and a trailing twelve-month yield of 1.49%.
One of the top 10 holdings of the Vanguard Total Stock Market ETF (NYSEARCA:VTI) is Alphabet, Inc. (NASDAQ:GOOGL). On August 3, Tigress Financial analyst Ivan Feinseth raised his price target on Alphabet, Inc. (NASDAQ:GOOG) to $186 from $183 and reiterated a ‘Strong Buy’ rating on the shares.
As of June 30, TCI Fund Management owns more than 2.47 million shares of Alphabet, Inc. (NASDAQ:GOOGL) and is the most prominent shareholder in the company. The investment covers 17.13% of TCI Fund Management’s 13F portfolio.
Arch Capital mentioned Alphabet, Inc. (NASDAQ:GOOGL) in its second quarter 2022 investor letter. Here is what the firm had to say:
“In May we decided to buy Alphabet Inc. (NASDAQ:GOOG) (parent company of Google, YouTube, and Android). Our thesis was simple. Alphabet has billions of locked-in users around the globe with businesses like Search, Maps, and YouTube that should grow in-line or faster than worldwide GDP. With all the cash these businesses generate, management is able to reinvest in Google Cloud, Other Bets projects like Waymo, and return cash to shareholders via share repurchases. At an enterprise value-to-free cash flow (EV/FCF) of around 20 at the time of our purchase, we believe this sets up shareholders for low risk 15%+ returns over the next five years.”
2. SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)
Yield (TTM): 1.89%
The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) invests at least 80% of its total assets in both growth and value stocks that operate in a wide array of sectors. The fund has investments across energy, real estate, industrial, healthcare, and technology stocks, among others. The fund employs a full replication technique and tracks the performance of the Dow Jones Industrial Average Index, or Dow. The SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) has a top 10 holdings concentration of 55.24%, a trailing twelve-month yield of 1.89%, and an expense ratio of 0.16%.
Among the top holdings of the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), we have Honeywell International, Inc. (NYSE:HON). On July 29, Citi analyst Andrew Kaplowitz raised his price target on Honeywell International, Inc. (NYSE:HON) to $222 from $211 and maintained a ‘Buy’ rating on the shares.
As of June 30, quant fund D E Shaw owns roughly 1.26 million shares of Honeywell International, Inc. (NYSE:HON) and is the top shareholder in the company. The investment covers 0.25% of D.E. Shaw’s 13F portfolio.
1. Schwab Emerging Markets ETF (NYSEARCA:SCHE)
Yield (TTM): 2.78%
The Schwab Emerging Markets Equity ETF (NYSEARCA:SCHE) invests in growth and value stocks of mid-cap and large-cap companies in emerging markets. The fund tracks the performance of the FTSE Emerging Index and employs a representative sampling technique. The fund has a top 10 holdings concentration of 21.64% and has investments across the financial, industrial, technology, healthcare, and energy segments, among others. The fund has an expense ratio of 0.11% and a trailing twelve-month yield of 2.78%.
One of the top holdings of the Schwab Emerging Markets Equity ETF (NYSEARCA:SCHE) is the leading semiconductor manufacturer and supplier of Apple, Inc. (NASDAQ:AAPL), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). On July 14, Susquehanna analyst Mehdi Hosseini revised his price target on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to $88 from $90 and reiterated a ‘Neutral’ rating on the shares.
In the second quarter of 2022, Fisher Asset Management raised its stake in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) by 1%, ending the quarter with $2.15 billion in TSM shares. The investment covers 1.52% of Ken Fisher’s 13F portfolio.
Here is what The Mercator International Opportunity fund had to say about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its second-quarter 2022 investor letter:
“Another example of this buyers’ strike is Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) (1.81%), down 40% from its high and trading at less than 15 times forward earnings. When TSM announced better-than-expected earnings growth of 67% in the second quarter with no slowdown in sight, the stock barely gained a few percentage points. No matter how good the news, buyers are not showing up. Yet.”
You can also take a look at the 10 Best Index Funds to Invest In 2022 and the 10 Best Metaverse ETFs To Buy.
