Vanguard remains one of the top exchange traded fund (ETF) providers in the market. Founded in 1975 by John Bogle, who is ultimately credited with founding the exchange traded fund (ETF). In addition to providing a range of other products and services aimed at institutional investors, one has to marvel at the fundamental change the ETF brought about for a whole generation of individual retail investors.
Given the company’s historical track record, as well as its impressive portfolio of offerings investors can choose from, those considering adding some passive ETF exposure to their portfolios may want to select from some of the world-class offerings that can be found on Vanguard’s platform.
In this current investing environment, I have a short list of around a dozen top Vanguard ETFs I think long-term investors may want to consider. Here are the three I’d be looking at adding in December for those looking to put fresh capital to work.
Vanguard Total International Stock ETF (VXUS)
I’m going to start with the Vanguard Total International Stock ETF (VXUS) as my first pick on this list, for one key reason. I think U.S. stocks are generally overvalued, and it’s simply an intriguing fact to consider that many of the top international markets provide companies that are growing at an impressive rate, but trade at a significant relative discount. For those value-conscious investors out there, finding the best ETFs that provide exposure to these trends at the lowest possible cost is a great way to go.
With an expense ratio of 0.05% and a dividend yield of 2.8% (compared to a yield just above 1% for similar U.S. ETFs), there’s plenty to like about this ETF. Additionally, investors won’t be exposed to some of the notable concentration risks I’m going to discuss below in other markets such as the U.S..
With a very diversified portfolio covering more than 8,000 global stocks around the world (all of which are based outside of the U.S.), this is an ETF I think could have relative growth, value and dividend outperformance that’s worth considering right now.
Vanguard FTSE Developed Markets ETF (VEA)
I’m going to stay in the same vein with this next pick. The Vanguard FTSE Developed Markets ETF (VEA) is another internationally-focused ETF, but with an outsized aim at pursuing top-quality investments in developed nations. With less emerging markets exposure, this is an ETF investors looking for a higher concentration of quality in their portfolios can rely on.
The specific markets VEA covers includes many European markets, Japan, and other developed major economies. With an even lower 0.03% expense ratio and a similar dividend yield of 2.8%, I’d say this could actually be the better bet of the two.
Indeed, the mix of higher yield exposure to companies with excellent growth prospects and better quality metrics is appealing to me. This is one ETF I’m personally considering for my own portfolio right now.
Vanguard S&P 500 ETF (VOO)
While having a higher concentration of international stocks is a great idea for long-term investors, it’s also blatantly obvious that investors who have ignored the U.S. market for most of the past two decades have absolutely underperformed most in the market.
The U.S. stock market continues to be the envy of the world, and that’s probably not going to change any time soon. Accordingly, I think investors need to own some exposure to blue-chip U.S. stocks, and the Vanguard S&P 500 ETF (VOO) is among my top picks for investors seeking a low-cost way to gain exposure to the top 500 companies domestically.
Now, the S&P 500 has become quite concentrated in recent years, with the top 10 companies accounting for around 40% of this index’s overall earnings. Accordingly, there are some investors who talk about the S&P 10 versus the S&P 490 when thinking about this market.
But with some of the best technology stocks in the world, and covering a market with some of the best protections for capitalist investors, I think having some allocation to an ETF like VOO is a winning long-term strategy.
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