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Vanguard offers more than 80 exchange-traded funds in the U. S. adapted to a variety of financial objectives and investment strategies Vanguard offers a variety of exchange-traded funds (ETFs) to cater to various investment preferences, ranging from total market equity funds to niche sector ETFs.
Forbes Advisor has compiled a list of the top Vanguard ETFs for starting from scratch and adding to an existing portfolio to assist you in selecting the appropriate investments.
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Vanguard ETFs have become synonymous with low-cost, diversified investing, offering investors a wide range of options to build a solid portfolio With over 80 ETFs in their lineup, choosing the best one for your needs can be overwhelming This guide will analyze the top Vanguard ETFs, focusing on those with the potential for high returns and broad diversification.
Key Considerations for Choosing Vanguard ETFs:
- Expense Ratio: Vanguard ETFs are known for their low expense ratios, which can significantly impact your long-term returns. Look for ETFs with expense ratios below 0.1%.
- Diversification: A well-diversified ETF will spread your investment across multiple assets, reducing risk and enhancing potential returns. Consider ETFs that track broad market indexes or hold a variety of securities across different sectors and market capitalizations.
- Investment Objective: Determine your investment goals and risk tolerance. Are you looking for aggressive growth or a more conservative approach? This will help you narrow down your choices.
- Past Performance: While past performance is not a guarantee of future results, it can provide insights into an ETF’s track record and potential. Consider ETFs with a history of strong returns and consistent performance.
Top Vanguard ETFs for Growth and Diversification:
- Vanguard Growth ETF (VUG): This ETF tracks the CRSP U.S. Large Cap Growth Index, focusing on companies with high growth potential. It features an above-average earnings growth rate of 19.6% and return on equity of 33.6%, making it an attractive option for investors seeking aggressive growth.
- Vanguard S&P 500 ETF (VOO): This ETF tracks the S&P 500 index, a benchmark of 500 large-cap U.S. stocks. It offers broad exposure to the U.S. market and has historically produced strong returns.
- Vanguard Total Stock Market ETF (VTI): This ETF tracks the CRSP U.S. Total Market Index, providing exposure to nearly all publicly traded U.S. stocks. It offers a more diversified approach than VOO and VUG, encompassing companies of all sizes and sectors.
- Vanguard Total International Stock ETF (VXUS): This ETF tracks the FTSE Global All Cap ex-US Index, offering exposure to international stocks outside the U.S. It provides diversification benefits and the potential for growth in emerging markets.
- Vanguard Total World Stock ETF (VT): This ETF tracks the FTSE Global All Cap Index, combining U.S. and international stocks for a truly global investment. It offers the most comprehensive diversification among the listed ETFs, encompassing over 9,400 stocks across various countries and sectors.
Additional Considerations:
- Expense Ratios: All the listed ETFs have expense ratios below 0.1%, making them cost-effective choices.
- Diversification: These ETFs offer varying levels of diversification, ranging from broad market exposure to specific growth-oriented strategies. Choose the ETF that aligns best with your risk tolerance and investment goals.
- Past Performance: The listed ETFs have historically delivered strong returns, with VUG exhibiting the highest growth potential. However, past performance is not indicative of future results.
Vanguard ETFs offer a compelling combination of low costs, diversification, and growth potential. By carefully considering your investment goals and risk tolerance, you can choose the best Vanguard ETF to meet your needs and build a solid portfolio for the future. Remember to conduct thorough research and consult with a financial advisor before making any investment decisions.
Vanguard FTSE Pacific ETF (VPL)
10-Year Avg. Ann. Return
Investing in businesses located around the Pacific rim is possible with the Vanguard FTSE Pacific ETF. About 2,500 stocks in businesses based in Singapore, Australia, Hong Kong, New Zealand, Japan, and Hong Kong are owned by the fund.
Approximately 2.55% of the fund is being used for work in companies based in Japan. Roughly another 20% is in Australian stocks. The next most exposed markets are New Zealand, Hong Kong, Singapore, and Korea.
Internationally recognized brands like Samsung, Toyota, and Sony are among the top ten holdings. VPL offers inexpensive access to significant companies in the developed Pacific markets for foreign investors. VPL has outperformed over the last ten years, but it has lagged behind VEU over the last five.
Vanguard Health Care ETF (VHT)
10-Year Avg. Annual Return
Approximately 400 stocks of businesses in the medical and healthcare products, services, technology, and equipment sectors are owned by the Vanguard Health Care ETF. The expected average annual three-to five-year earnings growth rate for VHT exceeds the average for its Morningstar category. Its top-10 holdings are mainly well known health-care companies. They make up nearly 50% of the fund.
One significant tailwind for the Vanguard Health Care ETF is the increasing number of older Americans. Approximately 25% of Americans will be 65 years of age or older by 2040. The Urban Institute estimates that this will be a significant increase from the proportion of that age group—roughly one in eight—in 2000.
5 Vanguard Funds Ranked for Highest Return
FAQ
What is Vanguard’s best ETF?
What ETF has the highest average return?
|
Symbol
|
Name
|
5-Year Return
|
|
XHB
|
SPDR S&P Homebuilders ETF
|
23.37%
|
|
IYW
|
iShares U.S. Technology ETF
|
23.06%
|
|
XSD
|
SPDR S&P Semiconductor ETF
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22.92%
|
|
URA
|
Global X Uranium ETF
|
22.74%
|
Which Vanguard ETFs pay the highest dividends?
|
Symbol Symbol
|
ETF Name ETF Name
|
1 Year 1 Year
|
|
VIG
|
Vanguard Dividend Appreciation ETF
|
18.41%
|
|
VYM
|
Vanguard High Dividend Yield Index ETF
|
16.14%
|
|
VYMI
|
Vanguard International High Dividend Yield ETF
|
15.13%
|
|
VIGI
|
Vanguard International Dividend Appreciation ETF
|
10.56%
|
What are the average returns on Vanguard ETFs?
|
S&P 500 ETF
|
1-yr
|
3-yr
|
|
Returns before taxes
|
29.83%
|
11.42%
|
|
Returns after taxes on distributions
|
29.36%
|
11.01%
|
|
Returns after taxes on distributions and sale of fund shares
|
17.91%
|
8.84%
|
|
Average Large Blend Fund
|
|
|
What is the best vanguard ETF?
Their high level of diversification across geographies, sectors, styles, credit quality, maturities and market-cap sizes can help investors easily tailor a portfolio to their desired risk tolerance, time horizon and investment objective. Our pick for the best overall Vanguard ETF is Vanguard Total World Stock ETF.
Is Vanguard total world stock ETF a good investment?
For a 0.07% expense ratio, Vanguard Total World Stock ETF offers a globally diversified exposure across over 9,500 stocks. With just a single ticker, investors can buy the world’s investable market with just one ticker. This makes VT a great pick for a set-it-and-forget-it equity allocation.
Which Vanguard ETF has the highest dividend yield?
Almost 21% of its holdings are financial services stocks, with a further 18% allocated to the healthcare sector. Top holdings include Berkshire Hathaway, Proctor & Gamble, Exxon Mobil, Merck, and JP Morgan Chase. In addition to the fund’s focus on value stocks, it also has the highest dividend yield of the five Vanguard ETFs covered.
What are the best Vanguard ETFs in 2024?
To identify the best Vanguard ETFs in 2024, we assessed more than 80 offerings based on the level of diversification, expense ratio, assets under management, management style and more. Vanguard S&P 500 ETF (VOO). Vanguard Total Stock Market ETF (VTI). Vanguard Total Bond Market ETF (BND). Vanguard Total International Stock ETF (VXUS).