The Smartest Vanguard ETF to Buy With $1,000 Right Now
Written by Matt Frankel for The Motley Fool -> The financial sector could be one of the best-performing areas of the stock market in 2025 and for several years after. While there's no guarantee that any sector, industry, or individual stock will perform well, there are a few big
The financial sector could be one of the best-performing areas of the stock market in 2025 and for several years after. While there's no guarantee that any sector, industry, or individual stock will perform well, there are a few big catalysts that could cause the financial sector to deliver better-than-expected profitability, growth, and of course, investor returns.
If you have $1,000 to put to work, the Vanguard Financials ETF (NYSEMKT: VFH) could be a great addition to your portfolio right now. Here's a rundown of what this low-cost ETF is, and why we could be entering an excellent growth environment for banks and other financial services stocks.
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The Vanguard Financials ETF is an index fund that focuses on the financial sector . This includes banks, financial services companies, insurance companies, and a few other categories.
Like most index funds, the Vanguard Financials ETF tracks a weighted index of financial stocks, which means that larger companies make up a larger percentage of the fund's assets. Here's a look at the top 10 holdings of the fund as of the latest information:
So it's important to realize that although this index fund owns more than 400 different financial sector stocks, it is rather concentrated. Forty-two percent of the fund's assets are invested in just 10 companies.
Like most Vanguard index funds, the Financial ETF has extremely low investment expenses. It has an expense ratio of just 0.1%, which means that $1 of every $1,000 in assets will go toward management costs annually. Note that this isn't a fee you have to pay. It will simply be reflected in the ETF's performance over time.
In a nutshell, the reason I'm writing about the Vanguard Financials ETF instead of any individual bank stock, and I own a few, is that there's an abundance of tailwinds that could affect the entire sector.
