Wall Street is on edge right now because the S&P 500 index (SNPINDEX: ^GSPC) is trading near all-time highs. Add in economic worries and ongoing geopolitical uncertainty, and you can see why some investors are concerned about the risk of a bear market in 2026. However, don’t let that deter you from investing, particularly if you take a long-term perspective. Here are three Vanguard exchange-traded funds (ETFs) that you may want to consider adding to your portfolio even if there’s a market sell-off in 2026.
Vanguard S&P 500 ETF(NYSEMKT: VOO) tracks the S&P 500 index, the most widely used gauge for tracking the broader market. It consists of roughly 500 companies that are hand-selected by a committee because they are representative of the U.S. economy. There are definitely better and worse times to invest in the market, but history is very clear about what happens to the S&P 500 index over the long term.
As the chart above highlights, after every bear market, the S&P 500 index eventually heads on to new highs. In other words, even if you bought at a market top, the upward climb of the S&P 500 has proven an unstoppable force when it comes to creating financial wealth. The key is to buy and hold for the long term.
So, if you are wondering whether to start investing right now, you shouldn’t be afraid to jump in. And if you want to keep your life simple, Vanguard’s low-cost S&P 500 index ETF (with an expense ratio of just 0.03%) remains a solid choice, even though the index it tracks is trading near all-time highs. In fact, a bear market would make it even more attractive. If you buy before a big drop, meanwhile, just dollar-cost average by buying even more. History suggests you’ll end up a long-term winner with this ETF.
Image source: Getty Images.
The Vanguard Dividend Appreciation ETF(NYSEMKT: VIG) tracks focuses on stocks that have increased their dividends annually for at least 10 consecutive years. From that pool, it eliminates the highest-yielding 25% and buys all of the rest of the investment candidates. The expense ratio is a low 0.05%. There are two big takeaways from the approach this ETF takes.
First, Vanguard Dividend Appreciation ETF uses dividend history to focus on well-run companies. After all, regularly increasing a dividend for 10+ years is something that only financially strong companies with good business models can achieve. Second, by eliminating the highest-yielding stocks from consideration, the portfolio is tilted in favor of growth. This is not an ETF you buy for yield; it is one you buy for growth and dividend growth.
This style of investing won’t go out of style just because of a bear market. And, with over 330 stocks in the portfolio, Vanguard Dividend Appreciation ETF offers up the risk-mitigation benefits of diversification along with a history of price appreciation and dividend growth.
AI, data centers, and electric vehicles are expected to lead to a 55% increase in electricity demand between 2020 and 2040. That’s a sea change in the utility sector, which saw demand grow just 9% between 2000 and 2020. Meeting this demand is going to lead to decades of investment in the utility sector that should, if history is any guide, result in reliable growth for utilities no matter what happens with the overall market.
You could purchase individual utilities in an attempt to capitalize on this long-term opportunity. However, a much easier way to do it is to buy Vanguard Utilities ETF(NYSEMKT: VPU). The index it tracks is specifically designed to ensure the portfolio is diversified, the expense ratio is a reasonable 0.9%, and roughly 90% of the portfolio is exposed either directly or indirectly to the growing electricity demand that is expected over the coming decades.
You could try to time the market, but that’s an approach that is hard to replicate consistently over time. You’ll be far better off buying and holding ETFs like Vanguard S&P 500 ETF, Vanguard Dividend Appreciation ETF, and Vanguard Utilities ETF. This trio provides investors with three distinct investment approaches, each with long-term potential. One likely will align well with your investment approach, even if a bear market is on the way in 2026.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Dividend Appreciation ETF and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
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