Best Etf To Buy 2018 ((BETTER))

Vanguard's two dividend ETFs have different ways of tackling the question of which dividend stocks are best for investors. For the Vanguard Dividend Appreciation ETF (VIG 0.48%), the key ingredient for a successful dividend stock is consistency in delivering rising payouts to investors year in and year out. Meanwhile, for those who just want the highest yield possible, the Vanguard High Dividend Yield ETF (VYM 0.29%) uses a more straightforward approach. As it turns out, only one of these funds has managed to post better returns than the broader S&P 500 so far in 2018, and it's interesting to draw conclusions from the two ETFs' relative performance.

best etf to buy 2018

The winner of the race between these two Vanguard dividend ETFs so far in 2018 is Vanguard Dividend Appreciation. It's also managing to outpace the broad-market index tracker Vanguard S&P 500 ETF, albeit by only the slimmest of margins.

Vanguard High Dividend Yield, on the other hand, hasn't done nearly as well. It's trailing the market by almost exactly 5 percentage points so far in 2018, and it's underperforming its counterpart by an even larger amount.

When you look at short-term performance, it might seem like a no-brainer to go beyond simply looking at high-yield dividend stocks to focus on companies that have been able to grow their dividends over time. But when you look beyond 2018, it's not nearly as clear-cut. Sometimes high-yield stocks dominate. Performance depends on many factors, ranging from the direction of interest rates and the overall stock market to the strength of various sectors of the economy.

Either Vanguard High Dividend Yield or Vanguard Dividend Appreciation can be good investments for dividend investors. Even with Dividend Appreciation leading so far in 2018, history has shown that you can't go wrong with either of these top dividend ETFs over time.

Two words explain the difference: emerging markets. These faster-growing but less stable economies have acted terribly in 2018, and some experts suggest American stocks will pummel EMs for the foreseeable future.

Global mergers and acquisitions hit a 17-year high in the first quarter of 2018 providing the index with many potential opportunities. More importantly, merger arbitrage situations rarely are affected by market environments, so it all comes down to whether the buyer has done enough homework on the acquisition target to bring the deal home.

Stocks didn't do too well in 2018, but a few Sector SPDRs still posted gains. Below, we'll look at how Healthcare Select Sector SPDR (XLV 0.54%), Utilities Select Sector SPDR (XLU 0.43%), and Consumer Discretionary Select Sector SPDR (XLY 0.87%) managed to deliver positive returns last year.

The healthcare SPDR led the way in 2018, with a total return of 6%. As investors hunkered down into a defensive posture over the course of the year, companies that provide vital healthcare products and services tended to fare better than some traditionally higher-growth areas of the market. When you look at some of the biggest players in the market, top Dow performers Merck and Pfizer played vital roles in driving the sector higher, with impressive share-price appreciation and healthy dividends.

The utilities ETF also managed to post a gain on the year, rising 4%. Rising interest rates posed a threat to these low-growth stocks early in 2018, as investors feared that regulated companies wouldn't be allowed to raise utility rates to keep their dividend yields competitive with fixed-income securities. Yet later in the year, it became evident that the pace of future interest rate increases would almost certainly slow, and weaker economic growth made the defensive characteristics of utility stocks more attractive.

Finally, somewhat surprising late in the economic cycle was the success of consumer discretionary stocks. The Sector SPDR for consumer discretionary posted a 2% rise in 2018, but there was an unusual aspect to the ETF that was pivotal in generating that result.

Fully 22% of the consumer discretionary ETF's assets were invested in e-commerce giant Amazon.com (AMZN 1.75%) at the end of 2018, reflecting the company's huge market capitalization. Amazon had amazing performance during the first part of 2018, and even though its share price fell substantially near the end of the year, it still finished with solid gains. That was pivotal in driving the ETF's overall return, even though the many retailers, restaurant companies, automakers, and other businesses that have smaller weightings in the ETF didn't fare nearly as well. Amazon has plenty of potential for future growth, but the ETF's huge weighting to the e-commerce giant makes it a riskier proposition than many of its more diversified counterparts in other sectors.

It's hard to predict future performance based on past results, and just because these sectors did well in 2018 doesn't mean they'll continue to do well in 2019. The beauty of Sector SPDRs is that they give you the opportunity to use whatever strategies make the most sense to you, and so whether you think these ETFs will duplicate their strong relative performance in 2019 or others will take their place, it's easy to position your portfolio appropriately.

Perhaps the best way to avoid taxes is investing in asset classes that are considered "tax-free." And you can't get better than municipal bonds. Issued by state and local governments/authorities, muni's are generally free from Federal taxes and in many cases, free from state taxes as well. For investors, this ability to generate tax-free income can be a godsend. And for higher earners, the effect is even better.

Unfortunately, dividends are a taxable event, and every year you need to send the Feds their portion. Historically, growth stocks haven't been known for their dividends. Which is good news for tax-efficiency. If you buy a stock like Google (NASDAQ: GOOG , NASDAQ: GOOGL ) - which does not pay a dividend - and hold it for a long time before selling it, you get to defer taxes. So, growth-stock ETFs have long been some of the best places to actually lower your taxes. After all, the long-term capital gains rate is just 15%.

The $61 billion ETF tracks the NASDAQ 100 Index. This index holds roughly 100 of the largest U.S. and international non-financial stocks listed on the Nasdaq Index. The Nasdaq is known as a home to some of the biggest tech and growth names in the U.S. As a result, "The Cubes" represents one of the best ways to add growth stocks and their typically lower taxes to a portfolio. Also adding to its tax appeal is lower bid/ask spreads thanks to its swift trading volume.

And while the QQQ does pay a dividend, it's small, with a 12-month distribution rate of 0.83%. The tax effects of that small yield are inconsequential even to higher earners. All in all, the QQQ's represent one of the best ETFs to get equity exposure and lower taxes.

ETFs tax-efficiency also shines when they are doing what they do best. And that's being as broad and cheap as possible. The broadest of them all could be the Vanguard Total World Stock ETF (NYSEARCA: VT ).

One of the best ETFs to take advantage of this is the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD ). SCHD uses a fundamental index that looks for high-yielding companies with a record of consistently paying dividends and maintaining strong financials. SCHD will screen for cash flows, total debt, return on equity, dividend yield and five-year dividend growth rates. The 100 best scoring stocks are selected for the ETF. Top holdings include stalwarts like Exxon (NYSE: XOM ) and Johnson & Johnson (NYSE: JNJ ).

The Fund's investment objective and investment strategies changed effective May 1, 2018 and again on August 1, 2018. Hybrid index performance (noted as "Index" above in the chart) reflects the performance of the Solactive Global Uranium Total Return Index through April 30, 2018, the Solactive Global Uranium & Nuclear Components Transition TR Index through July 31, 2018, and the Solactive Global Uranium & Nuclear Components Total Return Index thereafter.

All these portfolios give you instant and sufficient diversification. But with target-date funds, the asset mix becomes more conservative as you approach retirement. Balanced funds, by contrast, maintain a constant allocation, typically around 60% to 65% stocks and 35% to 40% bonds. If you're unlikely or unwilling to monitor and tweak your portfolio over time, your best bet is a target-date fund that suits your age.

Herein we present a list of 25 biotech companies, ranked by their market cap as of October 30, 2018 as furnished by the exchanges on which they trade their shares, or by other publicly available sources.

Like the S&P 500, Nasdaq quarterly returns have been very strong in the new year, recovering from their plunge in Q4 2018. Still, investors should account for the whispers about a potential recession coming later in the year or next year.

We find that excluding each of the three top-dog categories improves performance relative to the World portfolio, but also increases the tracking error, which means that the reliability of the strategy wanes as each market-cap category is excluded. Over the last half-decade holding the largest market-cap stocks has not hurt performance. Have markets suddenly caught EMH religion? Or have growth stocks been on a roll globally, beating value stocks by some 2.5% a year for the last 11 years (using MSCI World Growth versus Value)? We would argue that if this is the best mega-cap stocks can do with a powerful tailwind from growth beating value, the recent benign results for mega-cap names is hardly a basis for complacency. 041b061a72