JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon recently raised eyebrows with a candid CNBC podcast interview, signaling he would not buy most stocks at today’s elevated valuations.
Dimon’s cautious stance does not necessarily mean everyday investors should follow suit or pull back from the market entirely.
Dimon is a billionaire approaching retirement, meaning his investment goals and time horizon differ significantly from those of the typical long-term investor.
Perhaps most critically, no one has cracked the code on market timing, not even the chief executives of the world’s largest financial institutions.
Even investors who share Dimon’s valuation concerns have solid options available, particularly through broadly diversified, low-cost exchange-traded funds.
The Vanguard Total Stock Market ETF (NYSEMKT: VTI) holds 3,531 U.S. stocks across large-cap, mid-cap, and small-cap companies, charging an ultralow expense ratio of just 0.03%.
Since its inception in May 2001, VTI has delivered average annual returns of 9.48%, climbing to 15.04% annualized over the past 10 years and 12.24% over the past five years.
Technology currently dominates VTI’s portfolio at 41% of the fund, with industrials at 12.5% and consumer discretionary at 12.3% ranking a distant second and third.
Index funds like VTI constantly adjust their holdings based on market movements, meaning even overpriced sectors can be naturally rebalanced as investors rotate into other areas.
For those wanting less tech exposure, the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) offers a compelling alternative, holding 103 fundamentally strong stocks with an expense ratio of just 0.06%.
Since its launch in October 2011, SCHD has returned an average of 13.09% annually, with an impressive 24.08% return over the past year alone.
Information technology makes up only 9.23% of SCHD’s portfolio, with healthcare at 20.7%, consumer staples at 20.4%, and energy at 14.1% leading the fund’s sector weightings.
Top holdings include Abbott Laboratories, UnitedHealth Group, and Merck, each representing roughly 4.4% to 4.5% of the fund’s total weight.
SCHD carries a trailing-12-month dividend yield of 3.30% and trades at a price-to-earnings ratio of 19, roughly a 25% discount to the S&P 500’s multiple of 25.5.
Investors seeking even broader diversification beyond U.S. tech can look to the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI), which holds 1,565 stocks across 45 countries.
VYMI has posted average annual returns of 21.11% over the past three years and approximately 27.5% over the past year, making it one of the stronger-performing international dividend funds available.
The fund’s top holdings include global banks HSBC Holdings and Royal Bank of Canada, alongside pharmaceutical giants Novartis and Roche Holding.
VYMI carries a trailing-12-month dividend yield of 3.68% and trades at a price-to-earnings ratio of just 14.6, a steep discount compared to the broader U.S. market.
Regardless of near-term valuation concerns, continuing to buy and hold diversified index funds remains a time-tested strategy for investors focused on building long-term wealth.
