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The markets are turning out to be quite unpredictable this year. Retirement ETFs like the Vanguard International Dividend Appreciation ETF (NASDAQ:VIGI), Schwab US Dividend Equity ETF (NYSEARCA:SCHD), and WisdomTree US SmallCap Dividend Fund (NYSEARCA:DES) can be the perfect hedge. Software stocks are bleeding as they did in 2022, with other sectors remaining anemic. Even record earnings beats cannot convince the market to pay a premium for these stocks.
On the other hand, assets considered safe are making a turnaround. If the environment gets worse, investors are likely to pile into them even faster. The retirement ETFs in this article are not only going to be beneficiaries of a safety-first Wall Street, but they’ll also get you snowballing returns over the long run.
You’d want substantial exposure to them ahead of more turmoil. OpenAI is increasingly in trouble due to its excessive spending, and the S&P software index has bled nearly 20% in just one month. If OpenAI can’t live up to its hundreds of billions of dollars in cloud computing commitments, it can turn into a cascade. Half of Microsoft’s (NASDAQ:MSFT | MSFT Price Prediction) and over 60% of Oracle’s (NYSE:ORCL) backlog is just from OpenAI.
Even silver and gold are turning into speculative high-volatility assets due to the sheer number of investors trying to find safety. Sure, they’re market anchors, but both of these assets are doing double-digit swings, which is not what you want for safety.
Vanguard International Dividend Appreciation ETF (VIGI)
You’re likely familiar with the Vanguard Dividend Appreciation Index Fund ETF (NYSEARCA:VIG). VIGI is similar, but it invests in non-U.S. companies. That fact has been a disadvantage in the past few years, but things are changing quickly.
The U.S. dollar has lost over 13% of its value against the Euro in the past year and is continuing to slide. Trump’s nominee for the Fed is expected to continue cutting rates. In turn, the USD may slide even further. It’s good news for VIGI, as foreign stocks will then rise in valuation for you. We’ve already seen this play out, as VIGI is up exactly 13.5% in the past year. After all, most holdings are European.
I expect VIGI to continue performing well for the next few years if policies aren’t changed rapidly. A U.S. with lower interest rates, lower import dependency, plus a Europe that wants to gain more autonomy, will inevitably result in a weaker dollar. Morgan Stanley sees “another 10%” decline this year.
The dividend yield is 2.1% and the ETF comes with an ultra-low expense ratio of just 0.07%.
Schwab US Dividend Equity ETF (SCHD)
SCHD is very well-known among dividend investors, and that is for good reason. This ETF rarely disappoints. You’d be right to point out that SCHD disappointed from 2022 to 2025, but I’m confident it can close the gap in 2026.
Year-to-date, it is already up 13.5%. It can end the year on a strong note at this pace, as investors are de-risking their portfolios and are buying into stocks held by this fund. SCHD gives you something no other equity ETF does yet: a 3.3% dividend yield, ultra-low 0.06% expense ratio, along with good upside prospects.
Holding SCHD for decades can snowball your holdings and boost your retirement portfolio considerably. This ETF does not have significant tech exposure. Stocks from the Technology sector constitute only 9.69% of this fund. I believe this can turn into a major advantage this year if investors keep prioritizing value and safety.
WisdomTree US SmallCap Dividend Fund (DES)
Kevin Warsh is the next Fed nominee, and he’s a hawk-turned-dove who now believes the AI boom will enable interest rate cuts. He also pointed out that tariffs did not stoke significant inflation. Only time will tell what kind of impact this will have on he economy if he does substantially lower interest rates.
However, what you can do to benefit from this is buy into small-cap stocks. If you’re a retiree, look into the WisdomTree US SmallCap Dividend Fund ETF.
This ETF tracks the WisdomTree U.S. SmallCap Dividend Index and gives you exposure to small-cap stocks that pay dividends. It has an interesting weighting method where it ranks companies paying more dividends relative to their size higher.
If rate cuts do go through, it will have a two-pronged impact on this ETF. First, rate cuts will lower Treasury yields, so investors will tilt towards higher-yielding assets. And second, lower rates are known to boost smaller businesses. Thus, I expect DES to do well in 2026.
It comes with a 2.52% dividend yield and an expense ratio of 0.38%. Dividends are paid monthly.