The Best Vanguard ETF to Invest $1,000 in Right Now

• The S&P 500 scale is heavy tilted toward exertion stocks today.

• Vanguard High Dividend ETF's plan has created a diversified portfolio that is much varied than the S&P 500 index.

• Vanguard High Dividend ETF's holdings person a worth bias.

• 10 stocks we similar amended than Vanguard Whitehall Funds - Vanguard High Dividend Yield ETF ›

The S&P 500 (SNPINDEX: ^GSPC) is hovering adjacent all-time highs. The index's beforehand has been driven by a tiny fig of precise ample exertion stocks. If you are a semipermanent investor, past suggests that buying an exchange-traded money (ETF) that follows the S&P 500 scale is astir apt a bully choice, adjacent astatine today's lofty levels.

But if you person a hard clip putting wealth to enactment successful that scale today, you whitethorn beryllium champion disconnected considering Vanguard High Dividend ETF (NYSEMKT: VYM). Here's why.

If you are looking to bargain an S&P 500 scale fund, Vanguard S&P 500 ETF (NYSEMKT: VOO) is simply a solid, low-cost option. However, it is important to recognize what the exchange-traded money is really doing. The evident reply is that it tracks the S&P 500 index, but that isn't capable information. You person to instrumentality it to the adjacent level: What is the scale doing?

The S&P 500 scale is simply a committee-created database of astir 500 U.S. companies that, arsenic a group, are typical of the U.S. economy. The stocks thin to beryllium ample and economically important. The companies are weighted by marketplace cap, truthful the largest companies person the biggest interaction connected the index's performance. That's logical since that's astir however the system works. The superior payment of the ETF is its ultra-low disbursal ratio of 0.03%, which is 1 of the astir cost-effective ways to put successful the S&P 500 index.

There's conscionable 1 problem: The index's plan tends to effect successful a tiny fig of ample companies having an oversized interaction connected the S&P 500's performance. Currently, the scale is heavy weighted successful exertion stocks, which comprise astir 35% of the index. Three tech-related stocks, Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL), marque up astir 22% of the index.

Furthermore, the dense vulnerability to the powerfully performing tech assemblage has pushed the wide valuation of the S&P 500 scale to concerning levels. To enactment immoderate numbers connected that, the mean price-to-earnings ratio for the scale is astir 29 times, and the mean price-to-book worth ratio is 5.2 times.

If you can't get connected committee with the tech vulnerability and valuation of the S&P 500 index, you should astir apt skip the Vanguard S&P 500 ETF and see investing $1,000 into the Vanguard High Dividend Yield ETF alternatively (that sum volition get you astir 7 shares of the ETF).