S&P 500 Sell-Off: 3 Strong Vanguard ETFs to Consider Now

Recently, the S&P 500 (^GSPC 1.08%) has faced challenges, dipping into correction territory last week and showing a decline of 8.73% since mid-February. Current market sentiment reveals that nearly 60% of investors in the U.S. are feeling negative about the market outlook for the next six months, according to a survey conducted by the American Association of Individual Investors in mid-March.

Although it remains uncertain whether a recession or a bear market is imminent, this dip presents a potential opportunity to acquire stocks at more appealing prices. In essence, the market is currently like a sale, making it a favorable time to consider investing in certain Vanguard exchange-traded funds (ETFs) that could yield strong returns.

1. Vanguard S&P 500 ETF

If you prefer a more conservative investment option during these volatile times, the Vanguard S&P 500 ETF (VOO 1.01%) can be a smart choice. This ETF is designed to track the S&P 500 index, meaning it holds the same stocks and aims to replicate the index's long-term performance.

The S&P 500 comprises stocks from 500 of America's largest companies, many of which are established leaders in their industries and have demonstrated resilience during economic downturns. Thus, investing in an S&P 500 ETF serves as a safer option, especially during times of market instability. Over the past century, the index has historically endured numerous economic challenges, including significant recessions and market crashes.

2. Vanguard S&P 500 Growth ETF

If you seek an S&P 500 ETF that has the potential for greater returns, the Vanguard S&P 500 Growth ETF (VOOG 1.68%) may catch your interest. Like the S&P 500 ETF, it consists of stocks from the S&P 500, but focuses specifically on companies expected to experience substantial growth.

This ETF serves as a balanced option, offering less risk than many other growth-based ETFs while still providing exposure to fast-growing companies within the S&P 500. Over the past decade, it has achieved an average annual return of 14.63%, outpacing the Vanguard S&P 500 ETF’s return of 12.93%. While this difference may seem small, it can lead to significant increases in your investment over time.

3. Vanguard Information Technology ETF

The Vanguard Information Technology ETF (VGT 1.32%) specializes in the technology sector, featuring a portfolio of 314 technology-related stocks. Although this option carries higher risk due to lower diversification, it has historically provided impressive returns.

Over the past ten years, this ETF has averaged a return of 19.76% per year. If you invested $200 each month at that rate, you could potentially accumulate around $2.7 million in thirty years. However, it is crucial to note that the tech sector often experiences larger swings during economic downturns. For instance, the Nasdaq Composite (^IXIC 1.41%) has seen a decline of over 11% since mid-February.

Despite the short-term volatility, the prospects for long-term growth in technology make this ETF an appealing investment. Currently, it is priced around $560 per share, which is lower than its recent peak of approximately $644, presenting a potential buying opportunity for those looking to venture into the tech market.

Market downturns can be intimidating, but they also create excellent buying opportunities. Regardless of which ETFs you decide to invest in, maintaining a long-term perspective and holding onto your investments for several years is advisable. While the immediate future may be uncertain, historical trends show that markets often recover from even the toughest of challenges.

S&P500, Vanguard, ETFs