2 ETFs That Help Investors Avoid Sanctioned Securities

In today's interconnected global economy, investors must navigate a complex landscape of geopolitical risks and regulatory challenges. One such challenge is the potential exposure to sanctioned securities, which can have significant implications for portfolio performance and compliance. To help investors mitigate these risks, we present two ETFs that focus on U.S.-based companies, reducing exposure to sanctioned entities and providing a more stable investment environment.



1. Vanguard Total Stock Market ETF (VTI)

The Vanguard Total Stock Market ETF (VTI) is an excellent choice for investors seeking to minimize exposure to sanctioned securities. VTI tracks the CRSP U.S. Total Market Index, which includes over 3,600 stocks across various market capitalizations. With an expense ratio of just 0.03%, VTI offers a cost-effective way to gain broad-based exposure to the U.S. equity market.

One of the key advantages of VTI is its high allocation to the technology sector, which currently stands at around 35%. This exposure to the growth and innovation of the tech industry can drive long-term returns, but it also comes with its own set of risks, such as volatility and potential regulatory challenges. By focusing on U.S.-based companies, VTI reduces exposure to foreign currency fluctuations and geopolitical risks.

As the U.S. economy evolves, VTI's sector allocations may shift, reflecting changes in the broader market. For instance, if the technology sector continues to grow and dominate the U.S. economy, VTI's allocation to technology may increase. Conversely, if other sectors like healthcare or consumer goods gain prominence, VTI's allocation to those sectors may increase as well.

2. SPDR S&P 500 ETF Trust (SPY)

The SPDR S&P 500 ETF Trust (SPY) is another strong option for investors looking to avoid sanctioned securities. SPY tracks the S&P 500 Index, which consists of 500 leading U.S. companies across various sectors. With an expense ratio of 0.9%, SPY offers a more diversified sector allocation compared to VTI, with technology making up around 27% of its assets.

SPY's focus on U.S. large-cap stocks limits its exposure to sanctioned entities, as these are more likely to be smaller or foreign companies. This focus on large-cap stocks also provides a more stable and less volatile investment option, making SPY an attractive choice for risk-averse investors.

As the U.S. economy evolves, SPY's sector allocations may change, reflecting shifts in the broader market. For example, if the U.S. economy becomes more focused on sustainable or green technologies, SPY's allocation to energy and utilities sectors may increase. Conversely, if the U.S. economy shifts towards more consumer-driven growth, SPY's allocation to consumer goods and services sectors may increase.

In conclusion, VTI and SPY are two ETFs that help investors avoid sanctioned securities by focusing on U.S.-based companies. Their broad-based nature and exposure to large-cap U.S. stocks make them attractive options for international investors seeking diversification, stability, and risk mitigation. As the U.S. economy evolves, these ETFs' sector allocations may change, affecting their risk-return profiles over time. By staying informed and adapting to these changes, investors can continue to benefit from the long-term growth potential of these ETFs.