Tech Giants Drove Market Rebound but Other Areas Offer More Balance, Says Author Touting 3 Long-Term ETF Buys
• The stock market has rebounded 44% since 2022 lows, but tech giants like Nvidia, Meta, Microsoft & Amazon drove a disproportionate amount of the gains. The equal-weight S&P 500 ETF has lagged but offers more balanced exposure.
• Rising rates have hit high-dividend stocks hard, with the Vanguard High Dividend Yield ETF up just 27% since market lows versus 44% for the S&P 500. These stocks could rebound if rates fall.
• Small caps are trading at a 25-year valuation low relative to large caps after dramatically underperforming over the past 5 years. The Vanguard Small-Cap Value ETF combines this disconnect.
• Value stocks have also lagged growth, with growth outperforming value by about 2x over the past 5 years. The Vanguard Small-Cap Value ETF could benefit if this gap narrows.
• The author believes now is a good time to buy these 3 ETFs for the long-term, even if short-term performance remains uncertain.