Worried About an AI Bubble? These 2 Vanguard ETFs Can Help Keep Your Portfolio Safe.

Artificial intelligence (AI) stocks have been hot buys in recent years, but as they continue to rise in value, there are nagging concerns about whether they have become too expensive. There's increasing debate these days about whether there is a bubble, particularly relating to AI stocks, and whether there could be another big crash like in the dot-com era.

The counterpoint to that is, although valuations are high, the businesses whose values are rising are making significant profits; they aren't rising simply due to speculative purposes as they were in the early 2000s.

While that may very well be true, there's still a risk when buying a stock that is overpriced, as not only could your returns be limited, but if there's a correction in the market, these are the types of investments that could have the furthest to fall.

If you are concerned about a bubble and rising valuations in the market, there are a couple of exchange-traded funds (ETFs) you can invest in that can help diversify your portfolio and reduce some of your risk. A couple of excellent options are the Vanguard High Dividend Yield ETF (NYSEMKT: VYM) and the Vanguard U.S. Minimum Volatility ETF (NYSEMKT: VFMV).

Image source: Getty Images.

1. Vanguard High Dividend Yield ETF

Dividend stocks can be good risk-averse investments to hold on to as they are typically less volatile than growth stocks, plus the dividend income they can generate can help pad your returns. The Vanguard High Dividend Yield ETF has a portfolio of 566 stocks (as of Sept. 30), with a focus on high-yielding stocks.

Within the fund are many solid blue chip dividend stocks, including Procter & Gamble, Bank of America, and Walmart. These are the types of the stocks that can make for safe long-term buys. And with hundreds of holdings, the Vanguard fund can provide you with some excellent diversification.

The ETF yields around 2.5%, more than twice the rate of the S&P 500, which averages 1.2%. And its expense ratio is also fairly minimal at just 0.06%. When the market crashed in 2022 and the S&P 500 declined by 19%, this ETF fell by only 3%, and that's before factoring in its dividend income.

2. Vanguard U.S. Minimum Volatility ETF

Another way you can minimize your risk to the market is by focusing on low-volatility stocks. You can gauge how volatile a stock is by looking at its beta value. Anything less than 1.0 means that the stock has been less volatile than the overall stock market.

The Vanguard U.S. Minimum Volatility ETF invests in these types of stocks, which are less likely to move in unison with the market. There are 188 stocks in the fund (as of Sept. 30), but no single holding accounts for even 2% of the total portfolio. Many of the top stocks in the ETF are solid-but-unexciting companies, including Coca-Cola, McKesson, and Cisco Systems. These are dependable businesses to invest in, but they don't exactly scream growth or possess massive upside, where they would attract a lot of speculators.

Back in 2022, this ETF declined by nearly 8%, which is a bit worse than how the other Vanguard fund did during the market crash, but it still proved to be a better investment to hold than an S&P 500 index fund.

This ETF also offers an above-average yield of 1.7%, and its expense ratio of 0.13% is relatively low. For investors who want a low-risk way to gain exposure to a broad mix of stocks, this can be another good ETF to buy and hold.

Bank of America is an advertising partner of Motley Fool Money. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and Walmart. The Motley Fool recommends McKesson. The Motley Fool has a disclosure policy.