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S&P Investing on the Cheap


This week’s ETF Talk returns us to the realm of large American companies. There are a variety of ways to track the S&P 500 in exchange-traded fund (ETF) form, and this week’s featured fund offers a similar approach to those we have highlighted in recent weeks. But this one is a Vanguard fund, Vanguard S&P 500 ETF (VOO).

Since we last examined this fund in November, the big picture of the market has shifted. The S&P has been in an overall uptrend in the intervening months that seems to have tapered off and lost some steam early in 2015.

As usual for a Vanguard fund, VOO sports the provider’s characteristic low expense ratio, which in this instance is 0.05%. Good luck trying to find a cheaper way to own the S&P 500. This fund holds $26.5 billion in assets. Its 1.81% dividend yield provides another reason for owning it.

The biggest S&P 500 sectors, which VOO is designed to match, are technology, which weighs in with 19.90% of the index’s and fund’s assets; financials, at 16.00%; and healthcare, at 14.80%.

In addition, 17.70% of VOO’s funds are invested in its 10 largest positions. These positions include big, well known U.S. companies, such as Apple Inc. (AAPL), 4.0%; ExxonMobil Corporation (XOM), 2.0%; Microsoft Corp. (MSFT), 1.9%; Google Inc. (GOOGL), 1.7%; and Johnson & Johnson (JNJ), 1.5%.

It is hard to go too wrong investing in the S&P, since these large companies are relatively stable while tending to exhibit solid growth figures. If you feel there is safety in numbers, consider trying Vanguard S&P 500 ETF (VOO).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about a growth-focused ETF. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.