Vanguard’s impressive lineup of 86 exchange-traded funds, or ETFs, owes much of its success to a pivotal patent filed in 2001. Before this innovation, Vanguard was already celebrated for its mutual fund offerings in stocks and fixed income, distinguished by their low fees.
“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.”
The 2001 patent, however, was a game-changer, allowing Vanguard to introduce ETF share classes to its existing mutual funds. This ingenious approach enabled both the mutual funds and their ETF counterparts to mitigate capital gains taxes, benefiting investors across the board.
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“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,” says Lauren Wybar, senior wealth advisor at Vanguard.
Although the patent has since expired, its impact on Vanguard’s offerings remains significant. A prime example is the Vanguard Total Stock Market Index Fund Admiral Shares (ticker: VTSAX) and its ETF counterpart, the Vanguard Total Stock Market ETF (VTI).
Together, they command a staggering $1.5 trillion in assets under management, or AUM, a testament to Vanguard’s enduring appeal among investors seeking low-cost, diversified investment options.
But beyond VTI, Vanguard’s lineup also includes a variety of other ETFs that cater to diverse investment goals and strategies, each offering the hallmark combination of low fees and broad market exposure that Vanguard is known for.
Here are 10 of the best Vanguard ETFs to buy in 2024:
| ETF | Expense ratio |
| Vanguard S&P 500 ETF (VOO) | 0.03% |
| Vanguard Extended Market ETF (VXF) | 0.06% |
| Vanguard Total World Stock ETF (VT) | 0.07% |
| Vanguard Total International Stock ETF (VXUS) | 0.08% |
| Vanguard FTSE Developed Markets ETF (VEA) | 0.05% |
| Vanguard FTSE Emerging Markets ETF (VWO) | 0.08% |
| Vanguard High Dividend Yield ETF (VYM) | 0.06% |
| Vanguard Dividend Appreciation ETF (VIG) | 0.06% |
| Vanguard Growth ETF (VUG) | 0.04% |
| Vanguard Value ETF (VTV) | 0.04% |
Vanguard S&P 500 ETF (VOO)
“ETFs are a good investment option as they offer diversification, low costs and the ability to trade shares during the trading day,” Wybar says. For example, VOO offers the same benefits as its mutual fund share class but can be bought in increments of a single share at around $470, versus a $3,000 minimum.
VOO can be used in a variety of ways. Traders can use it to speculate on the short-term prospects of the S&P 500 easily, thanks to a very small bid-ask spread, which minimizes the cost of transactions. On the other hand, buy-and-hold investors can benefit from VOO’s low 0.03% expense ratio.
Vanguard Extended Market ETF (VXF)
Despite its popularity, it is important to note that the S&P 500 index tracked by VOO does not represent the entire U.S. stock market. Beyond the 500 companies represented by it, there are thousands of other small- and mid-cap stocks out there, which can provide investors with greater diversification and growth.
To cheaply access these stocks, investors can use VXF. This ETF tracks the S&P Completion Index, which basically holds the other 3,600 or so small- and mid-cap stocks excluded by the S&P 500. Buying this ETF is an easy way to bet on the middle and smaller end of the market for a 0.06% expense ratio.
Vanguard Total World Stock ETF (VT)
“Overall, Vanguard’s ETFs are widely acknowledged as dependable choices for investors seeking cost-effective means to achieve diversified exposure,” August says. A great example is VT, which provides investors with exposure to over 9,800 global equities, all for a 0.07% expense ratio.
VT’s benchmark, the FTSE Global All Cap Index, is designed to provide investors with market-cap-weighted exposure to U.S., international developed and emerging market stocks in a single ticker. This ETF can be used as a stand-alone aggressive holding, or as part of a more diversified portfolio with bonds.
Vanguard Total International Stock ETF (VXUS)
VT is currently around 60% U.S. stocks and 40% international stocks. For investors who want to adjust these ratios more to their liking, the solution is to pair a U.S. equity ETF like VOO or VTI with an international equity ETF like VXUS. This ETF combines developed and emerging market equities.
By tracking the FTSE Global All Cap ex U.S. Index, VXUS holds over 8,500 stocks. In fact, by combining VXUS and VTI, investors can actually end up holding a greater number of stocks compared to just buying VT. VXUS is also fairly affordable, at a 0.08% expense ratio.
Vanguard FTSE Developed Markets ETF (VEA)
Some investors may desire international diversification but wish to omit emerging markets like China due to political risk and higher volatility. To achieve this, investors can opt to break down VXUS further and target its developed segment via VEA, which tracks the FTSE Developed All Cap ex U.S. Index.
This ETF features just over 4,000 stocks from countries like Japan, the U.K., France, Germany, Canada, Switzerland, Australia and more. It is an affordable and accessible way to cheaply index international stocks without using American depositary receipts. VEA charges a 0.05% expense ratio.
[READ: 7 Best International Stock Funds to Buy]
Vanguard FTSE Emerging Markets ETF (VWO)
Emerging markets can offer growth opportunities but can also be subject to high volatility and unforeseen risks. For example, investors in the iShares MSCI Russia ETF (ERUS) were left with high losses after the ETF was terminated following the Russian invasion of Ukraine in February 2022.
To mitigate these risks, emerging market investors should consider spreading out their capital across a variety of countries. For example, an ETF like VWO holds over 5,700 stocks from China, India, Taiwan, Brazil, Saudi Arabia, South Africa and more. It charges a 0.08% expense ratio.
Vanguard High Dividend Yield ETF (VYM)
Investors seeking above-average, sustainable income from their portfolio can use Vanguard ETFs as well. The ETF to watch here is VYM, which tracks the FTSE High Dividend Yield Index. This ETF selects U.S. stocks forecasted to pay above-average dividends, and it currently has 30-day SEC yield of 3%.
VYM’s current portfolio consists of many large-cap, blue-chip stocks from traditional industries such as energy, financials and health care. Notable top holdings include JPMorgan Chase & Co. (JPM), ExxonMobil Corp. (XOM) and Johnson & Johnson (JNJ). The ETF charges a 0.06% expense ratio.
Vanguard Dividend Appreciation ETF (VIG)
Investors can also choose to focus on dividend growth instead of high yields. The ETF to buy here is VIG, which tracks the S&P U.S. Dividend Growers Index. This ETF screens for at least 10 consecutive years of dividend growth and eliminates the top 25% percentile in terms of yield to limit risk.
The result is a portfolio of stocks that pays a lower 30-day SEC yield of 1.7% but has historically performed strongly, with a 10-year total annualized return of 11.3%. Compared to VYM, VIG has a higher allocation to the technology sector. The ETF also charges a 0.06% expense ratio.
Vanguard Growth ETF (VUG)
Investors looking to bet on further momentum in this year’s bull market can use a growth ETF like VUG. This ETF tracks the CRSP U.S. Large Cap Growth Index and features an above-average earnings growth rate of 19.6% and return on equity of 33.6%, which are important metrics for growth investors.
Currently, the ETF has 55.8% of its portfolio concentrated in the technology sector, with around 25% of its portfolio held in just two stocks, Microsoft Corp. (MSFT) and Apple Inc. (AAPL). With a 0.46% 30-day SEC yield, it is also a very tax-efficient holding. VUG charges a 0.04% expense ratio.
Vanguard Value ETF (VTV)
Investors hunting for a bargain can also use Vanguard ETFs instead of trying to pick individual value stocks. The ETF to watch here is VTV, which is essentially the opposite of VUG. This ETF tracks the CRSP U.S. Large Cap Value Index, which holds stocks with a lower price-to-earnings and price-to-book ratio.
Compared to VUG, VTV’s portfolio features a higher allocation to stocks from sectors like financials, energy, health care and consumer staples. Examples include Berkshire Hathaway Inc. (BRK.B), Exxon Mobil, Johnson & Johnson and Procter & Gamble Co. (PG). VTV also charges 0.04%.
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10 of the Best Vanguard ETFs to Buy originally appeared on usnews.com
Update 03/06/24: This story was previously published at an earlier date and has bee updated with new information.
