Vanguard is one of the largest and most well-known providers of exchange-traded funds in the world. With over 100 ETFs available, Vanguard offers a wide range of options for investors of all experience and risk levels. With so many choices, it can be challenging to determine which ETF you should invest in with Vanguard. In this article, we’ll take a look at the best Vanguard ETFs to help you make an informed decision.
Table of contents
- What is an ETF?
- Best Vanguard ETFs
- Short-Term Inflation-Protected Securities ETF (VTIP)
- S&P 500 ETF (VOO)
- Emerging Markets Government Bond ETF (VWOB)
- Value Index Fund ETF (VTV)
- Total International Stock ETF (VXUS)
- U.S. Minimum Volatility ETF (VFMV)
- Real Estate ETF (VNQ)
- Short-Term Treasury ETF (VGSH)
- Total World Stock ETF (VT)
- Total World Bond Market ETF (BNDW)
- What is the best Vanguard bond ETF?
- Best Vanguard ETF for Dividends
- Which Vanguard fund has the highest return?
What is an ETF?
An ETF, or exchange-traded fund, is a type of investment that offers the owner a way to pool their money and invest in a basket of assets. ETFs trade on stock exchanges and can be bought and sold throughout the day. This means the value of an ETF fluctuates during stock market hours. ETFs typically track an index, such as the S&P 500, but this is not always the case.
ETFs offer investors several benefits, including diversification, liquidity, and lower costs. For example, investors can use ETFs to gain exposure to a broad range of asset classes without having to buy individual stocks or bonds.
In addition, ETFs are highly liquid, meaning they can be easily bought and sold on exchanges. And because ETFs are often passively managed, they tend to have lower fees than actively managed mutual funds. Furthermore, ETFs come in all shapes and sizes, specifically in relation to risk level and baskets of assets. For these reasons, ETFs have become increasingly popular with Canadian investors over the past decade.
Related Reading: Best Canadian ETFs for 2022
Best Vanguard ETFs
Vanguard is an American investment company that is also operational in Canada and internationally. They offer a ton of products, with ETFs being one of their most popular investments. Check out 10 of their best exchange-traded funds options below.
|ETF Ticker||Risk Level||Tracked Index||MER|
|VOO||High||S&P 500 Index||0.03%|
|VWOB||Medium||Bloomberg USD Emerging Markets Government RIC Capped Index||0.20%|
|VTV||High||CRSP US Large Cap Value Index||0.04%|
|VXUS||High||FTSE Global All Cap ex US Index||0.07%|
|VFMV||Low||Russell 3000 Index||0.13%|
|VNQ||High||MSCI US Investable Market Real Estate 25/50 Index||0.12%|
|VGSH||Low||Treasury bond index||0.04%|
|VT||High||FTSE Global All Cap Index||0.07%|
|BNDW||Low||Bloomberg Global Aggregate Float Adjusted Composite Index||0.06%|
Short-Term Inflation-Protected Securities ETF (VTIP)
The best Vanguard ETF for inflation is the Vanguard Short-Term Inflation-Protected Securities ETF (VTIP). This fund seeks to track the performance of the Barclays US TIPS Index, which includes short-term (1 to 5 years) Treasury Inflation-Protected Securities. VTIP has a low expense ratio of 0.04% and is well diversified, with over 1,700 holdings. The fund has a strong track record, outperforming its benchmark in 9 out of the last 10 years. Additionally, VTIP has low volatility, making it a good choice for investors seeking stability in their portfolio.
S&P 500 ETF (VOO)
If you’re looking for an exchange-traded fund that tracks the S&P 500 Index, then the Vanguard S&P 500 ETF (VOO) is a good choice. This ETF tracks the performance of a well-known index, which is a broad measure of large-cap U.S. stock market performance. The VOO ETF is also one of the largest and most popular ETFs, with over $200 billion in assets under management. In addition, if you’re looking for an ETF with low fees, then the Vanguard S&P 500 ETF is also a good choice. This ETF has an expense ratio of just 0.03%, which is lower than most other comparable products. Overall, VOO is a great option for investors seeking exposure to the large-cap U.S. stock market.
Emerging Markets Government Bond ETF (VWOB)
The Vanguard Emerging Markets Government Bond ETF (VWOB) is one of the best income exchange-traded funds for investors looking for exposure to emerging market debt. The fund tracks an index of sovereign bonds from over 20 emerging market nations, including Brazil, Turkey, and Indonesia. The bonds in the index are denominated in U.S. dollars and have maturities of at least one year. VWOB has a low expense ratio of 0.20%, making it one of the more affordable emerging market debt ETFs. For investors looking for income and diversification, VWOB is a top pick.
Value Index Fund ETF (VTV)
Vanguard Value Index Fund ETF (VTV) is one of the best vanguard ETFs for young investors. Its objective is to track the performance of a benchmark index that measures the investment return of large-capitalization value stocks. The fund invests at least 80% of its assets in the stocks of its underlying index, which covers approximately half of the U.S. stock market. The fund is well diversified and has a low expense ratio of 0.04%, making it a good choice for long-term investors. In addition, the fund’s dividend yield is higher than average, so it is an attractive choice for those seeking income on investments.
Total International Stock ETF (VXUS)
The Vanguard Total International Stock ETF (VXUS) is one of the best international ETFs. It invests in both developed and emerging markets, providing broad market exposure. The fund has a low expense ratio of 0.07% and is well diversified, making it an excellent choice for long-term investors. In addition, the fund has a strong track record of performance, outperforming its benchmark index over the past five years. For these reasons, the Vanguard Total International Stock ETF is a great choice for investors seeking an international ETF.
U.S. Minimum Volatility ETF (VFMV)
The Vanguard U.S. Minimum Volatility ETF (VFMV) is one of the best stock-based ETFs for investors seeking to minimize risk while still achieving decent returns. The fund tracks the performance of the Russell 3000 Index, which consists of large- and mid-cap stocks that have exhibited lower volatility than the broader market over the past 12 months. As a result, VFMV tends to be more stable than other stock ETFs, making it an ideal choice for risk-averse investors. With an expense ratio of just 0.13%, it’s not unreasonable in price.
Real Estate ETF (VNQ)
Vanguard Real Estate ETF (VNQ) is one of the best real estate ETFs available to investors. The fund invests in a variety of real estate-related securities, including REITs, MLPs, and real estate operating companies. VNQ provides exposure to a broad range of property types, including office, retail, residential, and industrial. The fund has a low expense ratio of 0.12%, and it pays a healthy dividend yield of 2.87%. Vanguard Real Estate ETF is a great choice for investors looking for exposure to the real estate market.
Short-Term Treasury ETF (VGSH)
The Vanguard Short-Term Treasury ETF is one of the best for short-term growth. The fund invests in a variety of short-term government bonds, providing exposure to a wide range of maturities. This diversification helps to reduce risk and increase returns. The fund has a low expense ratio of 0.04% and a very low yield, making it an excellent choice for investors who are looking for short-term growth.
Total World Stock ETF (VT)
The Vanguard Total World Stock ETF (VT) is one of the best for portfolio diversification. The VT provides investors with exposure to a broad range of global equity markets, including developed and emerging markets. The fund’s diversified portfolio helps to mitigate risk and is well-suited for long-term investing. In addition, the VT has a low expense ratio of 0.07%, making it a cost-effective way to achieve global diversification.
Total World Bond Market ETF (BNDW)
Vanguard Total World Bond Market ETF (BNDW) is one of the best bond ETFs out there. It is a low cost and diversified option that gives investors exposure to a wide range of global bond markets. The expense ratio for this fund is only 0.06% and it has a good rating. This ETF provides exposure to both government and corporate bonds from over 20 countries around the world. The average maturity of the fund is roughly 7 years and the effective duration is 5.4 years. This fund is best suited for investors with a long-term time horizon and a moderate risk tolerance.
Related Reading: BMO ETFs vs Vanguard ETFs
What is the best Vanguard bond ETF?
In terms of the best Vanguard bond ETF, it really depends on what your investment goals are. If your goal is to hold an ETF that primarily invests in bonds, there are plenty of options out there.
For instance, if you’re looking for a Vanguard bond ETF that will provide you with income, then you might want to consider the Vanguard High Dividend Yield Index Fund (VYM). This ETF had a dividend yield of 2.97% and an expense ratio of 0.06% as of August 2022. On the other hand, if you’re looking for a bond ETF with lower volatility and risk, then you might want to consider the Vanguard Intermediate-Term Corporate Bond Index Fund (VCIT). This ETF also has a decent dividend yield of 2.65% and expense ratio of 0.04% as of August 2022.
Ultimately, it’s important to align your investment goals with the specific characteristics of the Vanguard bond ETFs in order to choose the best one for you.
Best Vanguard ETF for Dividends
The best Vanguard ETF for dividends is Vanguard International High Dividend Yield ETF (VYMI). This fund tracks the FTSE All-World ex US High Dividend Yield Index. The expense ratio for VYMI is higher than other similar products at 0.22%, and the dividend yield is currently 5.24%. Keep in mind that this investment is high risk, but you are compensated with a healthy dividend.
Related Reading: Best Dividend ETFs in Canada for 2022
Which Vanguard fund has the highest return?
The best Vanguard fund for returns is the Vanguard Energy ETF (VDE). Over the last year, this fund has generated an annual return of 66%. This makes it the fastest-growing Vanguard fund worldwide. The fund invests in a variety of energy-related companies, including oil, gas, and alternative energy providers. As energy markets continue to rebound, this fund is well positioned to generate strong returns for investors.