Market fluctuations in 2018 have led to exchange-traded funds and investors reallocating their portfolios in an attempt to lower risks and volatility. CNNMoney reports that 58% of fund managers believe the market is peaking this year.
Investors and ETFs trimmed their holdings in April, primarily because of fear of a trade war. China further imposed import charges this week that will impact grain used to feed livestock. Investors fear that the trade war will slow the economy and lower business sentiment.
Vanguard Dividend Appreciation ETF (VIG) provides consistent growth to investors. Exchange Traded Funds in the portfolio are comprised of three major companies: Walmart (WMT), Microsoft (MSFT) and Johnson & Johnson (JNJ). Inflows from the ETF were $241.1 million in the first two weeks of April with the fund returning 17.4% a year on average. The dividend yield is 1.87%.
VIG stood at $102.40 on Thursday, down 0.59%. The ETF has remained stagnant over the last 30-day period from March 19 to April 19, starting at $102.85. The ETF is up 0.61% year-to-date and 15% year-over-year.
Walmart, which accounts for 4% of the VIG portfolio, is down 11.18% since Jan. 2, falling to $86.72 a share. The retail giant is facing headwinds from increased price competitiveness with the company discounting "traffic-generating products" by as much as 42%.
The company is working to protect its market share through steep discounts, which are expected to impact profit margins in 2018. Walmart's biggest competitor is Amazon (AMZN), which has grossly outperformed Walmart in 2018. Walmart claims it is is moving fast with its strategy to boost online sales.
Johnson & Johnson, which also makes up 4% of VIG's portfolio, has also had a turbulent start to the year, with the company's stock falling 6.24% year-to-date. The company posted better-than-expected financials on April 17 for the company's Q1 2018 quarter.
The company posted a sales beat of 3%, reporting $20 billion in sales with an earnings per share of $2.06. Johnson & Johnson updated their sales projections for 2018, with sales expected to be between $81 billion and $81.8 billion. The company's pharmaceutical division remains a strong revenue driver for the company, but investors remain concerned about sluggish growth rates in the company's medical devices and consumer healthcare divisions.
Remicade sales were unimpressive at $1.389 billion, 7% below the market consensus.
Microsoft has performed well, so far, this year. The company's stock is up 12.20% year-to-date. The company's stock is expected to continue to rise with an announcement that a dispute between Microsoft and the U.S. Department of Justice has come to an end.
The company also joined a pledge to combat cybersecurity threats alongside 30 technology giants, including Facebook (FB) and Oracle (ORCL). The company caught the attention of investors when it announced it would use software based on the Linux operating system. Microsoft will embed the technology into a chip used in internet-connected devices to combat cyberattacks.
Microsoft's strong growth has been a key factor in VIG's price remaining positive in 2018. Strong growth from JNJ and increased online sales at Walmart would help push the ETF's price higher in the second half of 2018.
Disclosure: Author does not have any stakes in the listed equities.
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