Since Jack Bogle, Vanguard’s founder, invented low-cost index tracking funds, the precursor to modern ETFs, they have grown steadily to manage more than $7 trillion for investors. Vanguard continues to lead the pack in low-cost fund investing, managing a range of 86 ETFs, and a host of mutual funds. But, which are the best Vangard ETFs to buy? In this guide, we will look at these ETFs and the opportunities they offer to US investors.
What Are Vanguard ETFs?
ETFs, or exchange-traded funds, trade on the stock market just like ordinary stocks and shares.
They aim to track the performance of a specific index, or other benchmark and are typically passive investments.
Jack Bogle, Vanguards founder, launched the first index tracking fund in 1976. Since then passive investing has grown into a multi-trillion-dollar industry.
Having invented the space, Vanguard has put its 48 years of experience to good use. The firm manages more than 80 Vanguard ETFs across a variety of strategies and asset classes.
Best Vanguard ETFs To Buy
Exchange-traded funds come in various flavors and Vanguard ETFs are no exception. Each Vanguard ETF is designed to track the performance of a specific underlying benchmark. For example growth stocks, in the Russell 100 index, the performance of the S&P 500 consumer discretionary sector, or, even high-yielding dividend stocks.
- Shares (Equities): Vanguard Total Stock Market ETF (VTI) – provides broad exposure to the entire U.S. stock market, including small-, mid-, and large-cap growth and value stocks. It’s a good choice for investors looking for diversified equity exposure.
- Bonds: Vanguard Total Bond Market ETF (BND) – offers comprehensive coverage of the U.S. investment-grade bond market, including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities.
- Gold/Commodities: Vanguard Commodities Strategy Fund (VCMDX) – Vanguard does not offer a specific ETF for gold or commodities. VCMDX is an alternative for those looking to invest in commodities through Vanguard, providing broad exposure to the commodities market – or see a selection of gold ETFs.
- Diversification: Vanguard Total World Stock ETF (VT) – invests in both U.S. and international stocks, offering global equity exposure which helps in diversification by spreading investments across many countries and industry sectors.
- Bear Markets: Vanguard Long-Term Treasury ETF (VGLT) – invests in U.S. long-term treasury bonds, which are often sought after during bear markets due to their potential to increase in value when stock markets decline and investors seek safer assets. For more info read our guide to inverse ETFs.
- Leverage: Vanguard does not offer leveraged ETFs as these are typically more speculative and involve higher risk. For more information read our guide to leveraged ETFs.
There are various ways to rate the funds to help decide which is the best Vanguard ETF for you to buy.
We could look at their 5-year or 10-year returns, or their expense ratios, effectively the annual cost of owning an ETF.
Perhaps the best way to decide which is the best Vanguard ETF to buy is to compare them with their peers.
Vanguard built its reputation on low-cost investing and it’s often the cheapest ETF provider.
Take the Vanguard S&P 500 ETF VOO, which has an expense ratio of just 0.03% per annum, compared to State Street’s rival SPDR Trust S&P 500 ETF, SPY, which charges 0.09%.
Lower fees mean you get to keep more of your investment returns.
How To Buy Vanguard ETFs
To buy or sell Vanguard ETFs you will need to have or open an account with a US based ETF investment platform. You can do this through Vanguard or with another provider, like Interactive Brokers.
To open your account, you will need to share some information with the brokerage company, such as your name, date of birth, social security number, bank details, income, net worth etc. Once your account is open and funded you are ready to start investing in Vanguard ETFs.
Are Vanguard ETFs A Good Investment?
Vanguard’s ETFs will only be as good an investment, as the instruments they track.
However, their low-cost approach and low minimum investment thresholds should favour investors over the long term.
The longer the time you are invested in the market, then the greater the chance you have of making money, and of benefiting from the low-cost regime and the effects of compounding.
Vanguard ETFs – FAQs
What’s the best Vanguard global ETF? The Vanguard Total World Stock ETF VT could fit this bill. It has a one-year return of +22.75%, a 5-year return of +10.95%, a 0.07% expense ratio and a minimum investment of just $1.00.
Are Vanguard ETFs better or worse than Fidelity’s? Vanguard has a wider range of ETFs than Fidelity and is synonymous with low-cost funds. What’s more Fidelity’s recently imposed $100.00 surcharge on other providers’ ETFs, traded through their platform, leaves a bad taste.
Is Vanguard generally good for ETFs? Yes, Vanguard is good for ETFs, they don’t have the biggest range of funds but there are plenty to choose from, many of which have low annual fees.
Which Vanguard ETF is the fastest growing? Year to date Vanguard’s S&P 500 Index ETF VOO has attracted almost +$28.70 billion in inflows.
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