Vanguard, a pioneer in fund management since 1976 with the launch of the first commercially available index mutual fund, has in recent years expanded its expertise into a robust lineup of exchange-traded funds, or ETFs.
This diversification marks a significant evolution in the firm’s offerings, aligning with the changing preferences and needs of investors. Today, Vanguard’s ETF lineup encompasses an impressive array of 84 different offerings.
“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.”
[Sign up for stock news with our Invested newsletter.]
This extensive range includes both active and index ETFs, covering various asset classes such as equity and fixed income. The lineup also spans broad market ETFs to those focused on specific sectors, providing a comprehensive suite of options, all of which charge low fees on average.
“Overall, Vanguard’s ETFs are widely acknowledged as dependable choices for investors seeking cost-effective means to achieve diversified exposure,” August says.
One of the key advantages of choosing Vanguard ETFs is the reduced potential for capital gains distributions. This benefit stems from the unique ETF creation and redemption mechanism, which typically allows for more tax-efficient management compared to mutual funds.
Additionally, Vanguard’s ETFs offer the flexibility of intra-day trading, a distinct advantage over mutual funds, which only allow purchases at the end of the trading day.
Another appealing aspect is the accessibility: With fractional trading and generally lower share prices, investors can avoid the minimum investment requirements often associated with 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.”
Here’s a look at 10 of the best Vanguard ETFs to buy today:
| ETF | Expense ratio |
| Vanguard S&P 500 ETF (ticker: VOO) | 0.03% |
| Vanguard Total Stock Market ETF (VTI) | 0.03% |
| 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 Real Estate ETF (VNQ) | 0.12% |
| Vanguard Information Technology ETF (VGT) | 0.1% |
| Vanguard Communication Services ETF (VOX) | 0.1% |
| Vanguard Utilities ETF (VPU) | 0.1% |
Vanguard S&P 500 ETF (VOO)
VOO passively tracks the S&P 500 index, a widely followed benchmark of broad U.S. large-cap equities. It does so at a rock-bottom 0.03% expense ratio, which amounts to around $3 in annual fees for a $10,000 investment in VOO. The lack of high fees helps VOO track its index more accurately over time.
Historically, VOO has been a very strong performer thanks to the momentum of the U.S. market over the past decade. Over the past 10 years as of Nov. 30, the ETF has returned an annualized 11.8%. Investors can expect a 1.5% 30-day SEC yield as of Nov. 30.
Vanguard Total Stock Market ETF (VTI)
As a market-capitalization-weighted index, VOO is dominated by mostly large-cap stocks, which are given higher weights. The index is also relatively devoid of mid-caps, and neglects small-cap stocks, too. To also capture the rest of the U.S. equity market beyond VOO, investors can buy VTI instead.
This ETF tracks the CRSP U.S. Total Market Index, which currently holds over 3,700 large-, mid- and small-cap domestic equities according to their market cap weights. As a passive index tracking ETF, investors can expect a very low portfolio turnover rate of just 3.4% and a low 0.03% expense ratio.
Vanguard Growth ETF (VUG)
Investors can also use Vanguard ETFs to tilt or overweight their portfolios toward particular “styles” of stocks. A common tilt is toward growth stocks, which are the shares of companies expected to grow their earnings and revenue at a higher rate compared to the broad market or their sector.
For affordable exposure to the large-cap growth stocks, Vanguard offers VUG. This ETF tracks around 220 growth stocks represented by the CRSP U.S. Large Cap Growth Index with a 0.04% expense ratio. At present, it is heavily weighted toward the technology and consumer discretionary sectors at 53.4% and 20.9%, respectively.
Vanguard Value ETF (VTV)
The opposite of VUG is VTV, which tracks the CRSP U.S. Large Cap Value Index. This ETF focuses on big companies that are trading at valuations below the broad market based on a variety of metrics, such as price-to-book and price-to-earnings. It also charges a 0.04% expense ratio.
VTV’s portfolio composition differs significantly from VUG. Whereas VUG’s top holdings include major tech companies like Microsoft Corp. (MSFT) and Apple Inc. (AAPL), VTV’s top holdings include Berkshire Hathaway Inc. (BRK.A, BRK.B), UnitedHealth Group Inc. (UNH) and JPMorgan Chase & Co. (JPM).
Vanguard High Dividend Yield ETF (VYM)
Income-focused investors can find some ideal Vanguard ETFs to buy and hold, too. A great example here is VYM, which tracks the FTSE High Dividend Yield Index. This ETF selects U.S. stocks that are forecasted to pay above-average dividends. At present, VYM pays a 3.3% 30-day SEC yield.
VYM’s current portfolio has a bias toward more value-focused sectors like financials, industrials, consumer staples, health care and energy. Notable names include JPMorgan Chase, Exxon Mobil Corp. (XOM), Johnson & Johnson (JNJ) and Procter & Gamble Co. (PG).
[7 Best Vanguard Funds for Retirement]
Vanguard Dividend Appreciation ETF (VIG)
Investors who don’t need the high yields of VYM but still wish to benefit from the long-term compounding effects of dividend investing may prefer VIG instead. This ETF tracks the S&P U.S. Dividend Growers Index, which only holds stocks that have increased their dividends for 10 consecutive years.
When selecting its portfolio, VIG also excludes the top 25% of the highest yielding stocks that would have otherwise been eligible to avoid yield traps. While it does pay a lower 1.9% 30-day SEC yield, the ETF’s total returns have historically been very competitive at 10.5% annually over the past 10 years.
Vanguard Real Estate ETF (VNQ)
Looking for real asset exposure? The Vanguard ETF for this task is VNQ, which tracks the MSCI U.S. Investable Market Real Estate 25/50 Index. VNQ provides broad exposure to domestic real estate investment trusts, or REITs, along with real estate service, development and operating companies.
Within VNQ, investors get exposure to a variety of REIT industries, such as data centers, hotels and resorts, health care, residential, industrial, retail, and self-storage for a 0.12% expense ratio. The ETF is currently projecting an adjusted effective yield of 2.7% as of Nov. 30.
Vanguard Information Technology ETF (VGT)
Investors looking to bet on continued outperformance from the technology sector and artificial intelligence, or AI, can eschew expensive thematic ETFs and pick VGT instead. This low-cost ETF from Vanguard charges just 0.1% to track the MSCI U.S. Investable Market Information Technology 25/50 Index.
VGT’s current top holdings include both Apple and Microsoft, which account for 22.2% and 21% of its holdings, respectively. However, it also includes semiconductor manufacturers such as Nvidia Corp. (NVDA) and Broadcom Inc. (AVGO), and software companies like Adobe Inc (ADBE).
Vanguard Communication Services ETF (VOX)
Wondering why VGT doesn’t hold companies like Meta Platforms Inc. (META), Alphabet Inc. (GOOG, GOOGL) and Netflix Inc. (NFLX)? It’s because these companies are technically classified as part of the communication services sector, despite some investors perceiving them as tech stocks.
For exposure to these stocks, investors can buy VOX, which tracks the MSCI U.S. Investable Market Communication Services 25/50 Index. The ETF also provides exposure to traditional telecommunication providers like Verizon Communications Inc. (VZ) and AT&T Inc. (T). VOX charges a 0.1% expense ratio.
Vanguard Utilities ETF (VPU)
Investors can also take a contrarian view and opt to bet on a lagging sector for 2024. The ETF to watch here is VPU, which is currently down 9.6% year to date as of Nov. 30. As interest rates rose and remained high, VPU’s portfolio of utility stocks suffered due to their capital-intensive nature.
Historically, VPU has been a solid performer, especially during times of economic crisis. In 2008, VPU fell by 28%, compared to 37% for VTI. In 2022, VTI fell by 19.5%, whereas VPU actually stayed in the green with a 1% gain. The ETF charges a 0.1% expense ratio and also pays a decent 3.5% 30-day SEC yield.
More from U.S. News
7 Best Vanguard Funds for Beginner Investors
Vanguard vs. Fidelity: Which Is Better for You?
8 Top-Performing Fidelity Funds for Retirement
10 of the Best Vanguard ETFs to Buy originally appeared on usnews.com
Update 12/20/23: This story was previously published at an earlier date and has been updated with new information.
