S&P 500 Sell-Off: 3 Vanguard ETFs to Consider Now

Recently, the S&P 500 (^GSPC) has been facing a significant downturn, dropping by 8.73% since mid-February and entering correction territory. A mid-March survey revealed that nearly 60% of U.S. investors are feeling uncertain about the market's outlook for the next six months, which adds to the prevailing anxiety about potential recessions.

While it's hard to predict exactly when a recession or market downturn might hit, this dip in the market may present a valuable chance to buy stocks at lower prices. The market is, in effect, on sale right now, creating opportunities to invest in certain Vanguard exchange-traded funds (ETFs) that could be beneficial.

1. Vanguard S&P 500 ETF

For those who prefer safer investments, the Vanguard S&P 500 ETF (VOO) might be a wise choice. This ETF mirrors the performance of the S&P 500 index and contains shares from 500 of the largest corporations in the U.S. These companies have demonstrated durability during economic challenges.

Investing in an S&P 500 ETF is generally considered a safer option, particularly during volatile market conditions. Historically, the index has withstood numerous recessions, market crashes, and bear markets throughout the past century.

Since the Vanguard S&P 500 ETF aims to replicate the index, it stands a good chance of enduring possible economic downturns. If you are feeling anxious about market conditions, this ETF may offer a layer of protection to your portfolio.

2. Vanguard S&P 500 Growth ETF

If you're searching for an S&P 500 ETF that has more growth potential, take a look at the Vanguard S&P 500 Growth ETF (VOOG). This fund features stocks from the S&P 500 but focuses exclusively on companies that demonstrate a strong potential for long-term growth.

This ETF strikes a balance between being a relatively safe investment and a more aggressive growth option. It includes stocks from 209 companies expected to grow faster than the average. Since these companies are large and part of the S&P 500, the fund carries less risk than typical growth ETFs.

Over the past decade, the Vanguard S&P 500 Growth ETF has achieved an average annual return of 14.63%, surpassing the Vanguard S&P 500 ETF average return of 12.93%. While the difference may seem small, it can lead to substantial gains over time.

3. Vanguard Information Technology ETF

The Vanguard Information Technology ETF (VGT) zeroes in on the technology sector, containing 314 stocks from different areas within tech. While it’s considered riskier, it has produced impressive returns over time.

This ETF has averaged a yearly return of 19.76% over the last decade. If you commit $200 monthly to this fund, you could potentially amass around $2.7 million in 30 years.

However, investors should be mindful that the tech sector can be particularly affected during tough economic times. For instance, the tech-heavy Nasdaq Composite (^IXIC) has dropped over 11% since mid-February. While this short-term volatility can be alarming, the long-term outlook for this ETF has been positive.

Considering the present market conditions, now may be an opportune time to invest in the Vanguard Information Technology ETF. The share price has recently fallen from about $644 to around $560, making it more appealing for potential buyers willing to accept a higher level of risk for the possibility of better-than-average returns.

Market fluctuations can be intimidating, but they also provide significant buying opportunities. Regardless of your investment choices, it's important to maintain a long-term investment strategy and hold onto your investments for several years. Historical trends show that the market has consistently recovered from its worst downturns.

Disclaimer: The author holds positions in Vanguard S&P 500 ETF and Vanguard Information Technology ETF. Educational purposes only. Consult a financial advisor before making investment decisions.

ETFs, Investing, Market