Most successful Vanguard ETFs for long-term returns

Vanguard stands out as a pioneering and reputable asset manager, known for its commitment to quality. In this article, we aim to highlight the numerous advantages and showcase the best Vanguard ETFs as recommended by esteemed industry experts.

With an impressive asset under management of over $7 trillion across a comprehensive range of funds, Vanguard has firmly established itself as one of the largest and most influential asset managers worldwide. Its global reach extends to more than 30 million investors across 170 countries.

Let’s delve into the factors that contribute to its global success and explore its remarkable history.

Vanguard history

Vanguard was established in 1975, with John C. Bogle as its founder. Bogle’s vision was both simple and revolutionary: a manager should prioritise the interests of its participants above all else.

One of Vanguard’s key contributions to the investment landscape is its pioneering approach to offering index funds at highly competitive costs. Extensive research has consistently shown that high costs act as a barrier to achieving long-term returns as they bite into investors’ profits.

Vanguard’s ability to provide such competitive costs can be attributed to its unique ownership structure. Unlike many other asset managers, which are owned by external companies or shareholders, Vanguard is owned by its own investment funds. This structure ensures that all profits are reinvested with the aim of achieving low costs for the participants of its funds.

John Bogle was among the first to emphasise that most actively managed funds fail to consistently outperform their benchmark indices. His core philosophy revolved around the notion that if one cannot surpass the market, then one should align with it.

By doing so at the lowest possible cost, Vanguard has managed to outperform the majority of active management funds. In fact, Vanguard was the trailblazer in promoting indexed investments during the 1990s and has since expanded its offering to encompass a diverse range of indexed funds on a global scale.

Best Vanguard ETFs according to Kiplinger

Vanguard has earned its place on numerous prestigious lists of the best ETFs, reflecting its remarkable success in the industry.

One notable endorsement comes from Kiplinger, a renowned US publisher, which has included three Vanguard ETFs in its list of recommendations. Kiplinger’s selection criteria encompassed factors such as the expense ratio (the lower, the better), trading volume (the higher, the better), and tracking error (the lower, the better).

Vanguard S&P 500 ETF (VOO)

For investors seeking exposure to the renowned S&P 500 index, the Vanguard S&P 500 ETF is an excellent choice.

There is the option of contracting the Vanguard S&P 500 UCITS ETF (EUR) to cover the risk of currency effect. This ETF’s primary holdings consist of the esteemed FAANG stocks, listed in the following order: Apple, Microsoft, Amazon, Facebook, and Alphabet.

Geographically, the ETF is primarily focused on the United States.

In terms of sectoral allocation, the Vanguard S&P 500 ETF is heavily weighted towards technology, financial services, healthcare, cyclical consumption, and communication services. Notably, technology holds twice the weight of the other mentioned sectors.

The current expense ratio for this ETF stands at 0.07%.

Vanguard Value ETF (VTV)

Investors seeking exposure to value stocks will find the Vanguard Value ETF to be an appealing choice. Its major holdings include prominent companies such as Berkshire Hathaway, JP Morgan Chase, Johnson & Johnson, UnitedHealth Group, and Procter & Gamble.

Sector-wise, the portfolio of this value ETF is primarily divided into financial services, healthcare, and industrial stocks, representing its major positions.

The expense ratio for the Vanguard Value ETF is currently at 0.04%.

Vanguard Tax-Exempt Bond ETF (VTEB)

Investors looking for tax-exempt fixed-income investments can consider the Vanguard Tax-Exempt Bond ETF. This ETF primarily invests in municipal debt issued by various American cities, including Texas, Denver, Minneapolis, and Florida. The majority of the debt holds high credit ratings, with AAA, AA, and A ratings. Only 8% of the debt falls within the BBB class.

The maturity profile of the debt is predominantly long-term, as indicated by Morningstar.

The expense ratio for the Vanguard Tax-Exempt Bond ETF is 0.06%.

Best Vanguard ETFs according to Forbes

Forbes’ list of best ETFs for investors also features a number of Vanguard ETFs, spanning across different categories. Let’s explore some of these Vanguard funds.

Vanguard Growth ETF (VUG)

The Vanguard Growth ETF focuses on investing in growth-oriented companies. Its major holdings include Microsoft, Apple, Amazon, Facebook, and Alphabet. It is worth noting that these companies, collectively known as FAANG stocks, feature prominently in the portfolio, albeit with varying weights. Moreover, technology companies take precedence over banks and financial holdings in terms of their weightings.

The current expense ratio for this ETF is 0.04%.

Vanguard Mega Cap Growth ETF (MGK)

The Vanguard Mega Cap Growth ETF closely resembles the Vanguard Growth ETF (VUG). However, it differs by having increased weightings in its major positions, while the overall inclusion of Microsoft and Apple remains consistent.

The current expense ratio for this ETF is 0.07%.

Vanguard Value ETF (VTV)

As previously mentioned, the Vanguard Value ETF offers exposure to value stocks and holds major positions in companies such as Berkshire Hathaway, JP Morgan Chase, Johnson & Johnson, UnitedHealth Group, and Procter & Gamble.

Vanguard Consumer Discretionary ETF (VCR)

True to its name, the Vanguard Consumer Discretionary ETF primarily invests in consumer-oriented companies, although in varying weights. Approximately 94% of the fund consists of cyclical consumer stocks, while the defensive consumer sector accounts for only 5%.

Major holdings of VCR include Amazon, Tesla, The Home Depot, McDonald’s, and Nike. Notably, The Home Depot is a leading global company in the do-it-yourself retail sector, with a comprehensive range of products for home improvements, hardware, and building materials.

The expense ratio for VCR stands at 0.10%.

Best UK brokers to trade Vanguard ETFs

Here is a list of the best UK brokers to trade or invest in Vanguard ETFs:

BrokerETF CommissionsFind Out More
eToro0%eToro review
PepperstoneFrom 0%Pepperstone review
ActivTrades0%ActivTrades review
XTB0%XTB review
IGFrom 0%IG review

Learn more about funds & alternatives to Vanguard ETFs

Best Vanguard ETFs: summary

In conclusion, Vanguard stands as a pioneering and highly regarded asset manager, lauded for its commitment to investor interests and its ability to offer competitive costs through its unique ownership structure. With over $7 trillion in assets under management across a diverse range of funds, Vanguard has solidified its position as one of the largest and most influential managers worldwide.

Vanguard ETFs FAQs

Are Vanguard ETFs suitable for long-term investors?

Yes, Vanguard ETFs are well-suited for long-term investors. Vanguard’s focus on low costs, diversified portfolios, and adherence to indexing strategies make their ETFs attractive options for investors with a long-term investment horizon.

How does Vanguard manage to offer competitive costs for its ETFs?

Vanguard’s ability to provide competitive costs for its ETFs can be attributed to its unique ownership structure. Unlike many other asset managers, Vanguard is owned by its own investment funds. This structure allows Vanguard to operate on a not-for-profit basis, with all profits being reinvested to benefit the participants of its funds.

Can Vanguard ETFs be suitable for both conservative and growth-oriented investors?

Yes, Vanguard ETFs offer options for both conservative and growth-oriented investors. Vanguard provides a diverse range of ETFs targeting different investment styles, sectors, and asset classes.

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