Top Picks 2016: Vanguard Russell 1000 ETF

01/22/2016 7:00 am EST

Focus: ETFs

When selecting core holdings for the growth component of your portfolio, it’s important to hone in on key factors such a low cost, diversification, and index construction, suggests David and Michael Fabian, editors of Flexible Growth and Income Report.

The Vanguard Russell 1000 ETF (VONE) checks all of those boxes for our Flexible Growth and Income Report. This ETF tracks 1,000 large- and mid-cap stocks with an emphasis on long-term growth. 

Top sector weightings in VONE include: financials, technology, consumer discretionary, and healthcare stocks. The asset allocation of this ETF is distributed in a market capitalization weighted structure as well. 

In our opinion, the best way to avoid getting run over by picking the wrong area of the market is to stay diversified with your core equity exposure.

The hit or miss proposition of individual stocks makes for a very difficult environment to maintain correlation with the broader market. 

Furthermore, VONE can provide a stable platform from which you can diversify into other tactical stocks or sectors that fit your investment thesis.

VONE is a currently a top holding within the equity sleeve of our model portfolio and will likely contribute to strong gains if the market remains steady in 2016.

This type of ETF provides a high degree of correlation with the broader stock market alongside the potential for outperformance versus a benchmark such as the S&P 500 Index (SPX). 

VONE has $585 million in total assets, charges an expense ratio of 0.12%, and has a 30-day SEC yield of 1.92%.

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