All-Time Highs for Stocks: These 2 ETFs Still Look Undervalued

Core Insights - The S&P 500 has reached a new all-time high, but not all ETFs are performing similarly, with some down by 10% or more from recent peaks [1] - The Vanguard Real Estate ETF (VNQ) has underperformed compared to the S&P 500 over the past decade, with a total return of 73% versus 264% for the S&P 500 [3] - The Vanguard International High Dividend Yield ETF (VYMI) has reached a new high but is considered inexpensive compared to U.S. high dividend stocks [7][9] ETF Performance - The Vanguard Real Estate ETF is highly sensitive to interest rates, with higher rates increasing borrowing costs and negatively impacting commercial property values [5] - Experts predict a downward trend in interest rates over the next couple of years, which could benefit the Vanguard Real Estate ETF [6] - The Vanguard International High Dividend Yield ETF holds about 1,550 companies outside the U.S. with a 4.1% dividend yield, including well-known companies like Toyota and Nestle [8] Valuation and Growth - The average stock in the Vanguard International High Dividend Yield ETF's index has seen earnings growth of 13.7% annually over the past five years and trades at a low valuation of 12 times earnings [9] - In contrast, the U.S. counterpart Vanguard High Dividend Yield ETF (VYM) has an average P/E of over 19 and slower earnings growth [9] - Despite risks associated with international stocks, the significant valuation gap presents a potential buying opportunity [10] Investment Strategy - All three mentioned ETFs are viewed as attractive long-term investments, with expectations of strong performance over the coming years rather than short-term gains [11]