Few investment firms have made the same impact on the lives of retail investors as Vanguard has. Founded in 1975 by John Bogle as an enterprise owned by fund shareholders, Vanguard has evolved to become a household name in the U.S. investment industry.
With numerous first-mover advantages like launching the first commercially available index fund in 1976, eliminating sales charges on the purchase of Vanguard funds and releasing the industry’s first bond index fund in 1986, there’s been no shortage of ways that Vanguard and Bogle have worked to continually lower costs for investors.
“Vanguard is highly regarded among professional investors and financial experts, primarily due to its extensive array of offerings,” says Sean August, CEO at The August Wealth Management Group. “The company is renowned for cost-effectiveness, flexibility, transparency and a client-centric approach.”
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Bogle’s philosophy lives on in the form of Vanguard’s exchange-traded fund, or ETF, roster, which currently spans 82 offerings. Investors can find equity ETFs targeting different geographies, styles, sectors and market-cap sizes, and bond ETFs focused on different issuers, geographies, credit qualities and maturities.
All of these ETFs offer low expense ratios as well, with the cheapest coming in at 0.03% and the most expensive charging 0.22%. For a $10,000 investment, this amounts to annual fees of $3 and $22, respectively. By buying Vanguard ETFs, investors can save significantly.
“Overall, Vanguard’s ETFs are widely acknowledged as dependable choices for investors seeking cost-effective means to achieve diversified exposure,” August says.
Vanguard’s ETF offerings can also offer some significant advantages over the firm’s lineup of mutual funds. “ETFs are a good investment option as they offer diversification, low costs and the ability to trade shares during the trading day,” says Lauren Wybar, senior wealth advisor at Vanguard. “Benefits unique to ETFs include lower investment minimums, real-time pricing and tax efficiencies due to the creation process and the ability to defer capital gains.”
With that in mind, here’s an overview of 10 of the best Vanguard ETFs to buy in 2023:
| Vanguard ETF | Expense Ratio |
| Vanguard S&P 500 ETF (ticker: VOO) | 0.03% |
| Vanguard Total Stock Market ETF (VTI) | 0.03% |
| Vanguard Total International Stock ETF (VXUS) | 0.07% |
| Vanguard Total World Stock ETF (VT) | 0.07% |
| Vanguard Growth ETF (VUG) | 0.04% |
| Vanguard Value ETF (VTV) | 0.04% |
| Vanguard High Dividend Yield ETF (VYM) | 0.06% |
| Vanguard Dividend Appreciation ETF (VIG) | 0.06% |
| Vanguard Information Technology ETF (VGT) | 0.1% |
| Vanguard Communication Services ETF (VOX) | 0.1% |
Vanguard S&P 500 ETF (VOO)
According to the latest SPIVA scorecard from S&P Dow Jones Indices, 93.4% of all U.S. large-cap funds failed to outperform the S&P 500 index over the past 15 years. Given the difficulty of beating an index, you can instead choose to invest in the index passively via an ETF.
To invest in the S&P 500 index, consider VOO. This ETF tracks the S&P 500 by purchasing a portfolio of stocks that’s the same as the roughly 500 U.S. large-cap names in the benchmark index. The stocks are allocated in the same manner as in the S&P 500 to ensure low tracking error. And all this comes at a low 0.03% expense ratio.
Vanguard Total Stock Market ETF (VTI)
A popular alternative and possible tax-loss harvesting partner for VOO is VTI. This ETF tracks the CRSP U.S. Total Market Index, a benchmark for total U.S. stock market performance. A good way to think about VTI is that it’s all the stocks in the S&P 500 plus thousands of other mid and small caps.
Historically, VTI has performed similarly to VOO due to its market-cap-weighted methodology. However, the addition of mid and small caps makes this ETF a bit more diversified. VTI also costs a 0.03% expense ratio.
Vanguard Total International Stock ETF (VXUS)
The counterpart for VTI when it comes to international stocks is VXUS. By tracking the FTSE Global All Cap ex U.S. Index, VXUS provides exposure to more than 7,900 small-, mid- and large-cap stocks from both developed and emerging market countries. All this comes at a reasonable 0.07% expense ratio.
In terms of country representation, VXUS holds a large allocation toward Japan equities at 16%, U.K. equities at 9.9%, China equities at 7.8% and Canada equities at 7.2%. The ETF overall is split roughly 75% in developed markets and 25% in emerging markets.
Vanguard Total World Stock ETF (VT)
Investors looking to invest passively in the global stock market as it currently stands can use VT, which tracks the FTSE Global All Cap Index. This ETF holds more than 9,500 U.S., international developed and emerging market stocks according to their current market-cap weights.
North American stocks comprise about 64% of VT, with European stocks clocking in at 16% and emerging markets making up 10%. Keep in mind that as the world’s stock market composition changes, so will VT. The ETF charges a 0.07% expense ratio.
Vanguard Growth ETF (VUG)
Investors looking to focus on large-cap U.S. stocks with above-average rates of earnings growth can use VUG for diversified, transparent and affordable exposure. By tracking the CRSP U.S. Large Cap Growth Index, VUG provides exposure to a portfolio of 235 notable U.S. growth stocks.
Currently, the top names in VUG include the likes of Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Nvidia Corp. (NVDA) and Alphabet Inc. (GOOG, GOOGL). Unsurprisingly, the ETF has a heavy tilt to the technology sector at 52% of its holdings. VUG charges a 0.04% expense ratio.
[READ: 10 Best Tech Stocks to Buy for 2023]
Vanguard Value ETF (VTV)
The counterpart to VUG is VTV, which targets large-cap U.S. stocks trading at favorable valuations. This ETF tracks the CRSP U.S. Large Cap Value Index, which currently holds about 340 stocks that trade at lower price-to-earnings and price-to-book ratios, mostly from the financials and industrials sectors.
VTV has a very different portfolio composition compared to VUG, with notable top holdings including Berkshire Hathaway Inc. (BRK.B), Exxon Mobil Corp. (XOM), UnitedHealth Group Inc. (UNH), Johnson & Johnson (JNJ) and JPMorgan Chase & Co. (JPM). The ETF also charges a 0.04% expense ratio.
Vanguard High Dividend Yield ETF (VYM)
Investors looking for above-average dividend yields can make use of Vanguard funds, too. For those seeking income from equity investments, the ETF to consider is VYM. This ETF tracks the FTSE High Dividend Yield Index, which targets large- and mid-cap U.S. stocks with higher-than-average yields.
Currently, VYM holds a higher allocation to the financials, health care, consumer staples, industrials and energy sectors. Top holdings include many value-oriented names like Exxon Mobil, Johnson & Johnson and JPMorgan Chase. The ETF charges a 0.06% expense ratio and pays a 30-day SEC yield of 3.2%.
Vanguard Dividend Appreciation ETF (VIG)
An alternative to VYM is VIG, which targets historical dividend growth instead of high forecasted yields. By tracking the S&P U.S. Dividend Growers Index, VIG provides exposure to over 300 U.S. stocks that have a minimum 10-year track record of consecutive dividend growth.
In addition, the S&P U.S. Dividend Growers Index used by VIG also screens out the top 25% highest-yielding companies, which better ensures stability and quality of dividends. The ETF charges a 0.06% expense ratio and has a 30-day SEC yield of 1.8%.
Vanguard Information Technology ETF (VGT)
Investors interested in making a bet on the current artificial intelligence, or AI, boom can make use of dedicated thematic ETFs, but that approach can come at the cost of higher fees and lower diversification. An alternative is a Vanguard sector ETF like VGT.
By tracking the MSCI U.S. Investable Market Information Technology 25/50 Index, VGT provides relatively low-cost exposure to some of the top U.S. tech stocks like Apple, Microsoft and Nvidia, many of which have AI involvement. This comes at a reasonable expense ratio of 0.1%.
Vanguard Communication Services ETF (VOX)
To round out VGT, tech sector investors can also buy VOX, which tracks the MSCI U.S. Investable Market Communication Services 25/50 Index. This index holds some companies that are regarded by investors as tech stocks, but that actually qualify as communications sector stocks.
For example, notable top holdings in VOX currently include names like Meta Platforms Inc. (META), Alphabet, Netflix Inc. (NFLX) and Activision Blizzard Inc. (ATVI), all of which are missing from VGT. Like VGT, VOX charges a 0.1% expense ratio.
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10 of the Best Vanguard ETFs to Buy originally appeared on usnews.com
Update 09/26/23: This story was previously published at an earlier date and has been updated with new information.
