Vanguard is one of the world’s largest investment management companies, with a mission to help investors achieve their financial goals through low-cost, diversified investment options. The company was founded in 1975 by Jack Bogle, who pioneered the idea of index investing and founded the first index fund for individual investors. Vanguard is considered a good choice for investors because of their focus on low-cost index funds and ETFs. They have a reputation for offering some of the lowest expense ratios in the industry, meaning that investors can keep more of their investment returns instead of paying high fees to the investment company. Now why commodity ETFs? Commodities may be a good investment choice in the next 10 years due to several factors. First, as the global population continues to grow and demand for natural resources increases, commodities such as energy, metals, and agriculture products are likely to see increased demand. Second, as countries continue to shift towards renewable energy sources, the demand for commodities used in the production of solar panels and batteries may also increase. Third, with continued government stimulus measures and the potential for inflation, commodities may serve as a hedge against inflation. Finally, geopolitical tensions and supply chain disruptions may also contribute to increased volatility in commodity markets, providing opportunities for active investors to generate returns. What are the top Vanguard commodity ETFs?
1. Vanguard Commodity Strategy Fund Admiral Shares (VCORX)
Vanguard Commodity Strategy Fund Admiral Shares (VCORX) is a mutual fund offered by Vanguard, one of the world’s largest investment management companies. It is the Admiral Shares version of the Vanguard Commodity Strategy Fund (VCORX), which means it is designed for larger investors who can meet the higher minimum investment requirement.
The fund’s objective is to provide long-term capital appreciation by investing in commodity-linked derivative instruments and other fixed-income securities. VCORX primarily invests in swap contracts, futures contracts, and other derivatives that provide exposure to a variety of commodity markets, such as energy, precious metals, and agricultural commodities. The fund may also invest in fixed-income securities, such as U.S. Treasuries, corporate bonds, and mortgage-backed securities.
As of September 30, 2021, the top holdings of VCORX include energy-related futures contracts, such as crude oil, natural gas, and heating oil, as well as futures contracts on precious metals like gold and silver. The fund also held fixed-income securities such as U.S. Treasury bonds. One of the top Vanguard commodity ETFs!
2. Vanguard Energy ETF (VDE)
Vanguard Energy ETF (VDE) is an exchange-traded fund (ETF) offered by Vanguard that seeks to provide investors with exposure to the energy sector. Specifically, VDE seeks to track the performance of the MSCI US Investable Market Energy 25/50 Index, which is a benchmark that reflects the performance of a basket of US-listed energy stocks.
The fund invests in a range of energy-related companies, including those involved in the production, refining, and distribution of oil, gas, and other energy-related products. VDE’s holdings are diversified across a range of market capitalizations, from large-cap energy companies to small-cap energy companies.
Some of the largest holdings in VDE’s portfolio include Exxon Mobil, Chevron, ConocoPhillips, and Schlumberger. The weightings of each holding in the portfolio are based on the MSCI US Investable Market Energy 25/50 Index methodology, which considers factors such as market capitalization and liquidity.
3. Vanguard Materials ETF (VAW)
Vanguard Materials ETF (VAW) is an exchange-traded fund (ETF) offered by Vanguard, one of the world’s largest investment management companies. The fund’s objective is to provide investors with exposure to the materials sector of the U.S. equity market, which includes companies involved in the production and distribution of raw materials and other basic commodities.
VAW seeks to track the performance of the MSCI US Investable Market Materials 25/50 Index, which is a market capitalization-weighted index that includes companies of all sizes in the materials sector of the U.S. equity market. The index includes companies involved in various sub-industries, such as chemicals, metals and mining, paper and forest products, and containers and packaging.
As an ETF, VAW is designed to provide investors with the flexibility to trade shares throughout the trading day, like individual stocks, and at a lower cost compared to actively managed mutual funds. VAW’s expense ratio is currently 0.10%, which is lower than the average expense ratio for similar actively managed mutual funds.
Investing in VAW can provide investors with exposure to a specific sector of the U.S. equity market, which can potentially offer diversification benefits and opportunities for growth. However, it’s important to note that investing in sector-specific ETFs like VAW can also come with risks, such as concentration risk and volatility. One of the top Vanguard commodity ETFs!
4. Vanguard Precious Metals and Mining Fund (VGPMX)
Vanguard Precious Metals and Mining Fund (VGPMX) is a mutual fund offered by Vanguard, one of the world’s largest investment management companies. The fund’s objective is to provide long-term capital appreciation by investing in the stocks of companies engaged in the exploration, mining, and production of precious metals, such as gold, silver, platinum, and palladium.
VGPMX typically invests at least 80% of its assets in the common stocks of precious metals and mining companies, with a focus on companies that have proven reserves of precious metals, strong balance sheets, and a history of profitable operations. The fund may also invest in other types of securities, such as preferred stocks, convertible securities, and warrants, as well as cash and cash equivalents.
Investing in VGPMX can provide investors with exposure to the precious metals and mining sector, which can potentially offer diversification benefits and opportunities for growth. However, it’s important to note that investing in this sector can come with risks, such as the volatility of commodity prices, geopolitical risks, and operational risks associated with mining and production activities.
VGPMX is actively managed, which means that the fund’s portfolio managers make investment decisions based on their assessment of the current market environment and the performance of individual companies in the sector. As with all actively managed funds, there is the potential for outperformance relative to the benchmark index, but also the risk of underperformance.