Best Vanguard Etfs: Top Picks For Your Portfolio

Exchange-traded funds (ETFs) are a popular investment option due to their low fees and the ability to trade for free using Vanguard's bulk dealing service. Vanguard's ETF lineup has 88 options, including the Vanguard S&P 500 ETF (VOO), which is a popular choice for investors seeking broad exposure to the U.S. stock market.

ETFs are similar to mutual funds in that they are both professionally managed collections of individual stocks or bonds, but there are some key differences. ETFs are traded on the stock market, meaning they can be bought and sold at any time during the day, whereas mutual funds are only traded once a day. ETFs also tend to have lower investment minimums, with Vanguard ETFs available for as little as $1.

When choosing which ETF to invest in, it's important to consider your personal goals and investing style, as well as your risk tolerance and investment horizon. While the Vanguard S&P 500 ETF offers broad market exposure, it is heavily weighted towards large-cap stocks and may not provide significant exposure to small or mid-cap companies.

Vanguard S&P 500 ETF (VOO)

The Vanguard S&P 500 ETF (VOO) is one of the best Vanguard ETFs to buy today. It has a slightly lower expense ratio of 0.03% compared to its counterpart, the Vanguard 500 Index Fund Admiral Shares (VFIAX), which has an expense ratio of 0.04%. The minimum investment required for VOO is also much lower at the price of a single share, around $550, compared to the required $3,000 minimum investment for VFIAX. This cost is even lower for anyone using a broker that allows fractional share investing, where portions of stocks and ETFs can be purchased for as little as $1.

The VOO ETF attempts to replicate the performance of its benchmark index, the S&P 500, by investing all of its assets in the stocks that make up the index, with the same approximate weightings. This ETF is ideal for investors who want to track the performance of the S&P 500 and benefit from its low expense ratio and low investment minimum.

Vanguard Total Stock Market ETF (VTI)

The Vanguard Total Stock Market ETF (VTI) is one of the best Vanguard ETFs to buy. It is ideal for investors who want the diversification of the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) but want higher liquidity. For a 0.03% expense ratio, this ETF tracks over 3,000 market-cap-weighted large-, mid- and small-cap stocks from all 11 stock market sectors.

Vanguard is well-known for running some of the largest and most prominent exchange-traded funds (ETFs) on the market. Its ETF lineup now has 88 options, emphasising low-cost, fixed-income options and innovative active funds.

Vanguard Extended Market ETF (VXF)

The Vanguard Extended Market ETF (VXF) is one of the 88 Vanguard ETFs available to investors. It is a market-capitalization-weighted index ETF that tracks the S&P Completion Index for a 0.06% expense ratio.

The VXF ETF is designed to provide exposure to almost all U.S. stocks except those found in the S&P 500 index. This means investors can pair the VXF with the Vanguard S&P 500 ETF (VOO) in different proportions to fine-tune their U.S. equity allocation. The VXF ETF is also available as an Admiral Shares mutual fund.

The VXF ETF is ideal for investors who want to focus more on mid- and small-cap stocks, as it has a high allocation to these. As of November 2024, investment experts recommend the VXF as one of the 10 best Vanguard ETFs to buy today.

Vanguard Total Bond Market ETF (BND)

The Vanguard Total Bond Market ETF is a popular choice for investors seeking broad exposure to the US bond market. With a portfolio of diverse bonds, this ETF provides a simple, convenient, and efficient way to invest in the bond market.

BND offers investors access to a wide range of US bonds, including government, corporate, and mortgage-backed securities. This diversification helps to spread risk and provide a more stable investment option. By investing in BND, you are essentially lending money to a variety of borrowers, from the US government to large corporations.

This ETF is an attractive option for those seeking a relatively low-risk investment strategy. Bonds are often considered a more conservative investment compared to stocks, and BND's broad approach helps to further mitigate risk. It is important to note, however, that all investments carry some degree of risk, and the performance of the bond market can be influenced by various economic factors such as interest rates and inflation.

One of the key advantages of investing in BND is its simplicity. Rather than researching and purchasing individual bonds, investors can gain exposure to the entire US bond market through a single ETF. This makes it easier to manage and balance your investment portfolio, especially if you are just starting or prefer a more hands-off approach.

Additionally, BND has a relatively low expense ratio, which means that investors keep more of their returns. This cost-effectiveness is a hallmark of Vanguard's investment philosophy, which prioritizes long-term, low-cost investing. As with any investment, it's important to consider your financial goals, risk tolerance, and time horizon before deciding if BND or any other ETF is right for you.

Vanguard ESG U.S. Stock ETF (ESGV)

ESGV has a fossil fuel exposure of 0.62%, placing it in the B tier, between 0% and 3% exposure. The fund has no direct stock holdings in the top 200 owners of carbon reserves, coal miners, coal services, or owners of coal reserves. However, it does have some investments in oil/gas producers and refiners, oil field services and equipment companies, and pipeline operators.

The Vanguard ESG U.S. Stock ETF has a dividend yield of 3.5% and is known for its income returns. It is one of 88 Vanguard ETF options, which are well-known for being some of the largest and most prominent exchange-traded funds on the market. Vanguard is also known for its low-cost model, with an average expense ratio of 0.09% compared to the industry average of 0.36%.

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