Earlier this year, the Vanguard S&P 500 ETF became the first exchange-traded fund (ETF) to surpass $1 trillion in assets. The ETF has grown in size thanks to its simplicity. It tracks the S&P 500 index and charges a mere 0.03% expense ratio, or $0.30 per $1,000 invested.
Many brokerages allow users to invest in fractional shares of the ETF. With low fees and the ability to invest a customized dollar amount in the ETF rather than full-share increments, the Vanguard S&P 500 ETF has become a popular choice for getting diversified exposure to the U.S. stock market. 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 » However, if given $1,000 to invest in any ETF in August, I'd choose the Vanguard Communication Services ETF (NYSEMKT: VOX) with its slightly higher 0.09% expense ratio, instead of the Vanguard S&P 500 ETF.
The Vanguard S&P 500 ETF hit a new all-time closing high on Aug. 7, finishing the session at $710.71 per share. A staggering 38% of the ETF is invested in tech stocks. And despite owning over 500 components, just 25 of them account for over half of the ETF.
The S&P 500 is now a growth-stock-focused index, and it's not as well diversified in dividend and value stocks as it used to be. So some investors may prefer to simply buy their favorite growth stocks and support those holdings with value- and income-focused ETFs. Or conversely, buy the Vanguard Morningstar Growth ETF or Vanguard Morningstar Mega Cap Growth ETF and support those holdings with individual, dividend-paying value stocks.
What makes the Vanguard Communication Services ETF unique is its heavy concentration in a handful of growth stocks. Alphabet and Meta Platforms make up 42.5% of the ETF. Throw in Walt Disney and Netflix, and that's over half the ETF in just four stocks.
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