Vanguard is known for its straightforward brokerage platform and a suite of low-cost mutual funds, yet it also boasts a significant array of exchange-traded funds (ETFs), offering 86 diverse options.
“Overall, 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.”
In particular, for self-directed retail investors, Vanguard’s ETFs present numerous compelling advantages over traditional mutual funds, particularly if you’re not restricted by a 401(k) plan’s choices.
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One key benefit of ETFs is the absence of minimum investment thresholds. While Vanguard’s Admiral Shares mutual funds typically require a $3,000 minimum investment, ETFs can be bought for the price of a single share. With many brokerages now offering fractional shares, even investors with limited funds can easily enter the market.
ETFs also offer greater flexibility. Unlike mutual funds, which are only traded at the closing net asset value (NAV) at the end of each trading day, ETFs are traded throughout the day like stocks. This allows for more dynamic trading strategies and the ability to respond quickly to market movements.
Moreover, ETFs are generally more tax-efficient than mutual funds. Although Vanguard’s mutual funds are relatively efficient in managing capital gains distributions thanks to a unique patent allowing for ETF share classes, the inherent structure of ETFs still generally provides superior tax efficiency.
This advantage stems from the “creation-in-kind” process used by ETFs, which typically results in fewer taxable events than those associated with traditional mutual funds.
“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.
Here are 10 of the best Vanguard ETFs to buy in 2024:
| ETF | Expense ratio |
| Vanguard Total Stock Market ETF (ticker: VTI) | 0.03% |
| Vanguard S&P 500 ETF (VOO) | 0.03% |
| Vanguard FTSE All-World ex-U.S. ETF (VEU) | 0.07% |
| Vanguard Total World Stock ETF (VT) | 0.07% |
| Vanguard Dividend Appreciation ETF (VIG) | 0.06% |
| Vanguard International Dividend Appreciation ETF (VIGI) | 0.15% |
| Vanguard High Dividend Yield ETF (VYM) | 0.06% |
| Vanguard International High Dividend Yield ETF (VYMI) | 0.22% |
| Vanguard Consumer Staples ETF (VDC) | 0.10% |
| Vanguard Real Estate ETF (VNQ) | 0.12% |
Vanguard Total Stock Market ETF (VTI)
“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, investors looking to invest in the broad U.S. stock market can easily do so via VTI, which tracks the CRSP U.S. Total Market Index for a low 0.03% expense ratio.
VTI currently holds around 3,700 market-cap-weighted small-, mid- and large-cap U.S. stocks. Because the ETF is so broad, it rarely has to sell or buy holdings, which ensures that portfolio turnover remains low at just 2.2% annually. Currently, it can be purchased for around $258 per share.
Vanguard S&P 500 ETF (VOO)
Interested in investing in the S&P 500? You can do so indirectly via an ETF like VOO, which replicates the S&P 500 by buying and holding all of its constituent stocks in the same proportions. For a price of around $478 per share, you can gain exposure to 500 of the leading U.S. companies.
Over the trailing 10 years, VOO has returned an annualized 12.4% with all distributions reinvested. This strong performance was largely made possible by its low turnover rate of 2.2% and minimal 0.03% expense ratio, both of which minimized drags on long-term net returns.
Vanguard FTSE All-World ex-U.S. ETF (VEU)
For exposure to large- and mid-cap stocks in international markets, investors can buy VEU. This ETF tracks the FTSE All-World ex U.S. Index, which holds more than 3,800 stocks from both developed and emerging markets. As with the previous ETFs, it is very efficient, with a low 3.7% turnover rate.
Some of the top foreign companies in this ETF include Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Novo Nordisk A/S (NVO), Toyota Motor Corp. (TM), ASML Holding N.V. (ASML), Nestle SA (NESN.SW), LVMH Moet Hennessy Louis Vuitton SE (MC.PA) and Shell PLC (SHEL). VEU charges 0.07%.
Vanguard Total World Stock ETF (VT)
Instead of combining VTI and VEU in various proportions, investors can also outsource the task of creating and managing a global equity portfolio to Vanguard via VT. This ETF holds more than 9,800 U.S., developed and emerging market stocks by tracking the FTSE Global All Cap Index.
For a 0.07% expense ratio, a 4.3% annual turnover rate and a price of around $110 per share, investors can attain the world’s average market returns with little to no effort or research needed. This ETF is also available in mutual fund form as the Vanguard Total World Stock Index Fund Admiral Shares (VTWAX).
Vanguard Dividend Appreciation ETF (VIG)
Investors wishing to focus on quality, blue-chip stocks can use a dividend growth ETF like VIG. This ETF tracks the S&P U.S. Dividend Growers Index, which only holds stocks that have grown dividends consecutively for 10 years, while excluding the top quartile of stocks based on yield.
The result is a portfolio of leading U.S. companies such as Microsoft Corp. (MSFT), Apple Inc. (AAPL), Broadcom Inc. (AVGO), JPMorgan Chase & Co. (JPM) and Exxon Mobil Corp. (XOM) that is less top-heavy compared to the S&P 500. VIG charges 0.06% and pays a 1.8% 30-day SEC yield.
Vanguard International Dividend Appreciation ETF (VIGI)
Dividend growth investors can also diversify internationally. For this purpose, Vanguard offers VIG. This ETF tracks the S&P Global Ex-U.S. Dividend Growers Index, which features a similar methodology compared to the index used by VIG, albeit with a focus on developed and emerging markets.
The current portfolio of 340-plus stocks includes Novo Nordisk, Sap SE (SAP), Nestle, Novartis A.G. (NOVN) and Roche Holding A.G. (ROG.SW) in its top holdings. However, investors should note that due to the specialized index and presence of international stocks, VIGI charges a higher 0.15% expense ratio.
Vanguard High Dividend Yield ETF (VYM)
While above average, VIG’s 1.8% 30-day SEC yield won’t appeal to income-oriented investors. The better Vanguard ETF for their needs is likely VYM, which delivers a higher 2.9% 30-day SEC yield by targeting the FTSE High Dividend Yield Index. It also charges the same expense ratio as VIG does, at 0.06%.
Currently, VYM’s portfolio of 550-plus stocks includes names like JPMorgan Chase, Broadcom, Exxon Mobil, Home Depot Inc. (HD), Procter & Gamble Co. (PG) and Johnson & Johnson (JNJ). It is also a decent proxy for value stocks, as it shares a 68% portfolio overlap with the Vanguard Value ETF (VTV).
Vanguard International High Dividend Yield ETF (VYMI)
Just as VIG has an international counterpart in the form of VIGI, VYM also has one in the form of VYMI. This ETF targets developed and emerging market dividend stocks via the FTSE All-World ex U.S. High Dividend Yield Index. As with VIGI, it is also more expensive, with a 0.22% expense ratio.
The portfolio of VYMI is similar to that of VIGI, with Nestle, Novartis and Roche featured near the top. But the ETF also holds energy, mining and banking dividend stocks known for higher dividend yields, like Shell, BHP Group Ltd. (BHP), TotalEnergies SE (TTE) and HSBC Holdings PLC (HSBC).
Vanguard Consumer Staples ETF (VDC)
Investors looking for greater specificity will appreciate Vanguard’s lineup of 11 sector ETFs, each of which corresponds to an individual GICS sector, such as industrials, technology, utilities, energy and more. For a focus on defensive consumer staples, the firm offers VDC at a 0.1% expense ratio.
This ETF currently holds a portfolio of 103 companies, 11 of which are “dividend kings” with 50-plus years of consecutive dividend growth. Notable names include Procter & Gamble, Walmart Inc. (WMT), Coca-Cola Co. (KO), PepsiCo Inc. (PEP), Colgate-Palmolive Co. (PG) and Target Corp. (TGT).
Vanguard Real Estate ETF (VNQ)
For exposure to real estate in a brokerage account, investors can use Vanguard’s real estate ETF in the form of VNQ. This ETF tracks the MSCI U.S. Investable Market Real Estate 25/50 Index, which not only holds real estate investment trusts (REITs), but also property management and service companies.
VNQ’s portfolio is broadly diversified across most real estate sub-sectors, with allocations to data centers, health care facilities, hotels and resorts, warehouses and distribution centers, residential facilities, commercial offices, and retail centers. It charges a 0.12% expense ratio.
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10 of the Best Vanguard ETFs to Buy originally appeared on usnews.com
Update 05/13/24: This story was previously published at an earlier date and has been updated with new information.
