The best value ETFs can help you retire rich and enjoy a combination of growth and dividend payouts. This article explores some of the best value exchange-traded funds to buy and hold to sleep well at night (SWAN).
Best value ETFs to buy
The best value ETFs to buy are the Vanguard S&P 500 (VOO), Schwab US Dividend Equity (SCHD), Pacer US Cash Cows 100 ETF (COWZ), and VanEck Morningstar Wide Moat ETF (MOAT).
Vanguard S&P 500 ETF (VOO)
The Vanguard S&P 500 ETF is one of the best fund to invest in today because of its low fees and the fact that it tracks the biggest companies in the US. It is a better fund to buy than the popular Vanguard Total Stock Market Index (VTI) that invests in almost all companies listed in the US because it focuses on the biggest names.
VOO is a better fund than the popular SPDR S&P 500 (SPY) ETF because of the fee spread between the two. It has an expense ratio of just 0.03% compared to SPY’s 0.09%. While this is a negligible spread, there is no good reason for investing in an expensive fund, especially when they track the same asset.
The S&P 500 index has a long track record of success since its introduction in 1950s. It has jumped from less than $50 to over $6,100 today. In this period, it has survived key events like the Cold War, the dot com bubble, and the COVID-19 pandemic. Therefore, there is a likelihood that it will keep rising in the coming decades.
Read more: 4 key catalysts for the Vanguard S&P 500 ETF (VOO)
Schwab US Dividend Equity ETF (SCHD)
The other good value ETF to buy is the Schwab US Dividend Equity ETF, which is a popular fund among income investors. It has accumulated almost $70 billion in assets under management (AUM) and an expense ratio of 0.06%.
The fund tracks companies across most sectors in the United States except those in the real estate industry. Most of its firms are in the financials, health care, consumer staples, and industrials. The most notable SCHD companies are Abbvie, Coca-Cola, Cisco Systems, Amgen, and Texas Instruments.
SCHD is a good value ETF because of its strong track record. It has a total return of 74% in the last five years compared to VOO, which has 94%.
Pacer US Cash Cows100 ETF (COWZ)
The Pacer US Cash Cows100 ETF or COWZ is one of the best value ETFs to invest in because it focuses on the most important aspect in a company: free cash flow. It is a top fund with over $25 billion in AUM and an expense ratio of 0.49%.
The fund is derived from the Russell 1000 index, which tracks the biggest companies in the United States. It then filters the 100 companies based on their free cash flows. The biggest companies in the fund are Gilead Sciences, AT&T, EOG Resources, Qualcomm, Valero Energy, Marathon Petroleum, and Chevron.
The benefit of this fund is that it has a long track record of doing well. Its total return of 110%, much higher than VOO’s 95% and SCHD’s 74%.
VanEck Morningstar Wide Moat ETF (MOAT)
The VanEck Morningstar Wide Moat ETF is another quality value ETF to buy and hold for optimum gains. It is a fund that seeks to invest in the top companies that have a wide moat in their industries. Some of the top names in the fund are Gilead sciences, Corteva, Disney, Boeing, NXP Semiconductors, and GE Healthcare. The MOAT ETF has had a total return of about 75% in the last five years, a strong return.
Some of the other value ETFs iShares Core Dividend Growth (DGRO), Vanguard High Dividend Yield Index Fund ETF (VYM), and the Vanguard Dividend Appreciation Fund (VIG).
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