3 ETFs That Are Screaming Buys in September

Some cracks are starting to appear in the stock market. After months of low volatility, uncertainty has returned to the market.

Nevertheless, smart investors know that it’s always a good time to buy — if you plan to hold for the long term. So, let’s examine three exchange-traded funds (ETFs) that remain screaming buys in September.

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VanEck Semiconductor ETF

First up is the VanEck Semiconductor ETF (SMH 1.82%). With this ETF, I’m leaning into the recent volatility brought on by Nvidia. That’s because, as a long-term investor, I want to use that volatility to my advantage.

Sure, valuations remain high for chipmakers like Nvidia. However, despite those short-term concerns, my long-term outlook for the semiconductor industry hasn’t changed.

First, the demand for artificial intelligence (AI) remains sky-high. Organizations are rushing to implement AI tools as fast as possible. That creates tremendous demand for the chips that serve as AI “brains.”

Second, there are only so many companies that can fulfill that demand — and almost all of them are semiconductor manufacturers represented in the VanEck fund. Simply put, making AI chips is very difficult. Few companies possess the technological expertise, advanced equipment, or facilities required to make advanced semiconductors.

To put it another way, the barriers to entry are incredibly high in the AI chip industry. I don’t know which semiconductor companies will ultimately come out on top over the next 10 or 20 years (although I have my favorites). Yet, no matter which companies emerge victorious, the VanEck fund should capture the rise of the winning stocks.

Pair that with the fund’s very impressive past performance — it has generated a compound annual growth rate (CAGR) of nearly 25% over the last 10 years — and it’s clear why the VanEck fund is worth buying on the dip.

Vanguard High Dividend Yield Index ETF

Second on my list is the Vanguard High Dividend Yield Index ETF (VYM 1.20%). The reason why this fund is a screaming buy in September has to do with the business cycle.

To vastly oversimplify, there are signs that the U.S. economy is starting to weaken: rising unemployment, fewer job openings, increasing loan delinquencies, etc.

Therefore, smart investors should take some time to consider whether their portfolios have the proper diversification — particularly when it comes to defensive stocks.

Defensive stocks are non-cyclical businesses, meaning their products and services are not impacted as severely when the overall economy stalls. Industries like pharmaceuticals, utilities, and consumer staples are loaded with classic defensive stocks, and this Vanguard fund is full of them, too.

In addition to their typical outperformance during stock market downturns, defensive stocks also tend to get a boost when interest rates decrease. That’s because most of them are dividend-paying stocks, which appeal to income-seeking investors pursuing higher yields as overall interest rates fall.

In short, it’s always a good time for investors to reevaluate their portfolios and ensure they have proper diversification. That’s what makes the Vanguard High Dividend Yield Index ETF a screaming buy for September.

Vanguard S&P 500 ETF

Last, there’s the Vanguard S&P 500 ETF (VOO 1.10%). When it comes to this fund, it’s a no-brainer. I want to buy shares of it whenever I can, particularly if the market has taken a dip.

The reason is simple: It’s a winning bet. And you don’t have to take my word for it. Study after study confirms the basic finding: investing in the overall stock market pays off in the long run, irrespective of your timing being perfect.

Furthermore, this Vanguard fund is a particularly smart way to invest. That’s because the fund’s expense ratio is a tiny 0.03%, meaning that for every $10,000, investors only pay $3 a year in fees. In the world of ETFs, that’s a very low expense ratio, which is great for investors. After all, the lower a fund’s fees, the more quickly an investor’s money will grow, thanks to the power of compounding.

In summary, some volatility has crept back into the market. However, investors should view that as an opportunity, not a reason to pull back from putting money to work. That’s why these three ETFs remain screaming buys in September.

Jake Lerch has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia, Vanguard S&P 500 ETF, and Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.