If I Had Only $500 per Month to Invest, These Are the 2 ETFs I'd Buy
2026-09-29 11:30
•David Dierking •The Motley Fool
••••• ••••••••••• Axe Cap view
Two ETFs Worth Considering for $500 Monthly Investments
Investors with small monthly sums might find value in semiconductor and US small-cap ETFs despite local market nuances.
South African investors looking at a $500 monthly investment should think carefully about exposure to global tech growth versus value opportunities. The VanEck Semiconductor ETF (SMH) has soared on the back of AI-driven chip demand and heavy capital spending by tech giants. This is a clear story if you believe in ongoing AI-driven tech progress, but keep in mind that a stronger dollar can pressure emerging market currencies like the rand and affect returns. On the flip side, the Avantis U.S. Small Cap Value ETF (AVUV) offers a value-driven approach in US small caps that are priced attractively and could benefit from a rebound in earnings expected around 2026. The rand’s strength or weakness against the USD will directly impact returns from these ETFs. For a local angle, sectors like mining or financials on the JSE remain uncorrelated to these themes and should be watched separately. Avoid jumping in without a clear forex and risk strategy. this is just our opinion and not financial advice
For clients starting small, I’d allocate monthly buys evenly between SMH and AVUV via rand-hedged currency exposure. This balances a high-growth tech bet with a more stable value play in US equities. Watch USD/ZAR closely and adjust currency hedging accordingly.
- USD/ZAR
- VanEck Semiconductor ETF (SMH)
- Rand volatility against USD impacting ETF returns
- AI hype-driven semiconductor valuations correcting
6/10
The article recommends two ETFs for monthly investment of $500: the VanEck Semiconductor ETF (SMH), which has benefited from the AI boom with 89% returns over the past year and is expected to continue growing due to massive capex spending from hyperscalers; and the Avantis U.S. Small Cap Value ETF (AVUV), which trades at attractive valuations and is positioned to benefit from accelerating small-cap earnings growth expected around 20% in 2026.
Our take is based on reporting first published by The Motley Fool.