Diversifying Asset Classes Via Vanguard ETFs
Pacific Park Financial Inc. | Jul 04, 2013 02:21AM ET
They are the 2nd largest providers of ETFs. They successfully leveraged their reputation as the low-cost leader of indexing. Regardless of your investment approach or philosophy, Vanguard offers more than 65 vehicles to get you to your destination.
Halfway through 2013, it makes sense to evaluate the impact of a variety of market movers (e.g., global economy, central bank policies, geopolitical backdrop, corporate well-being, etc.) on different asset classes. I thought it might make sense to do so in the context of the products that Vanguard offers.
1. U.S. Stocks via Vanguard Total Stock Market (VTI). Corporate earnings have remained reasonably strong over the past 12 months, though profitability has largely been a function of debt restructuring and productivity increases. In contrast, actual sales numbers have been flat. Higher interest rates have already caused consumers to slow down on big ticket purchases. What’s more, economic contraction in Europe as well as global political upheaval are likely to affect forward guidance for U.S. companies. Even the technical resistance of the 50-day moving average is giving bearish traders food for thought.
2. U.S. Bonds via Vanguard Total Bond Market (BND). The all registered losses between 5% and 10% over the last 6 months.
Vanguard does not have a precious metals ETF either. Maybe that’s a good thing for the fund family. After all, Vanguard Precious Metals (VGPMX) is down about 35% year-to-date thanks in large part to the extreme bearish price movement for gold and silver.
In sum, the only asset class that has not stared into the face of adversity is U.S. stocks. Still, avoiding a summertime slump may require positive corporate guidance in the upcoming earnings season, stable or falling bond yields as well as eurozone debt crisis containment. How tall is that order?
Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.