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

The S&P 500 (^GSPC 1.08%) has recently entered correction territory, experiencing a decline of 8.73% since mid-February. Current economic conditions have fueled fears of a potential recession, with nearly 60% of U.S. investors expressing pessimism about the market's prospects over the next six months, according to a survey conducted by the American Association of Individual Investors in mid-March.

While predicting the market's future can be uncertain, this downturn can also present an opportunity for savvy investors to buy stocks at reduced prices. Essentially, the market is on sale, and there are several compelling Vanguard exchange-traded funds (ETFs) you might consider adding to your portfolio during this time.

1. Vanguard S&P 500 ETF

If you prefer a more conservative investment approach or want to play it safe in today’s market, the Vanguard S&P 500 ETF (VOO 1.01%) may be a prudent choice.

This ETF tracks the S&P 500 index, which comprises 500 of the largest U.S. corporations, many of which have proven to be resilient through various economic downturns. Investing in this ETF is less risky, as it typically performs well during periods of market volatility.

The S&P 500 index has weathered numerous recessions and market crashes over the past century, suggesting it is likely to endure any challenges that might arise. If you're cautious about future market conditions, the Vanguard S&P 500 ETF can help provide stability to your investment portfolio.

2. Vanguard S&P 500 Growth ETF

If you seek an ETF that offers potential for higher growth while still providing some stability, consider the Vanguard S&P 500 Growth ETF (VOOG 1.68%). This fund includes companies from the S&P 500 that are recognized for their growth potential.

Boasting a portfolio of 209 stocks poised for faster-than-average growth, the Vanguard S&P 500 Growth ETF strikes a balance between being a relatively safe investment and one that has opportunities for significant upside. Over the past decade, this ETF has averaged an annual return of 14.63%, notably higher than the broader S&P 500's average return of 12.93%.

To illustrate, if you invest $200 monthly with an average growth rate of 14%, you could accumulate approximately $856,000 over 30 years. With a more modest return of 13%, the total could be around $704,000.

3. Vanguard Information Technology ETF

The Vanguard Information Technology ETF (VGT 1.32%) offers a focused investment in the technology sector, featuring 314 technology stocks. While this ETF carries more risk due to its lack of diversification compared to the previous two, it has a history of delivering impressive returns.

Over the last decade, this ETF has achieved an impressive average annual return of 19.76%. By investing $200 monthly, you could potentially amass around $2.7 million in 30 years at this growth rate.

However, the tech sector can be particularly volatile during economic downturns, as seen with the tech-heavy Nasdaq Composite (^IXIC 1.41%), which has seen a decline of more than 11% since mid-February. Although short-term volatility may pose challenges, this ETF has consistently outperformed the market over the long term.

Currently priced around $560 per share, down from about $644 just a month ago, now may be an opportune time to invest in the Vanguard Information Technology ETF if you're open to higher risk for potentially substantial returns.

Market downturns can be daunting; however, they also create remarkable buying opportunities. Regardless of the investment choice, it's advisable to maintain a long-term perspective and hold assets for several years. Historically, the market has successfully navigated through even the toughest downturns.

The author may hold positions in Vanguard S&P 500 ETF and Vanguard Information Technology ETF.

Investing, Stocks, Market