Personal Finance

These Vanguard ETFs Offer Income And Growth For Retirees

Joey Frenette

Published: March 11, 2025 6:11 am

What a painful start to the week it’s been for investors, especially retirees who may just have discovered they may have just a bit more equity exposure than their risk tolerance would allow for.

Indeed, it’s easy to be a fearless investor who’s more than willing to be heavier in equities than bonds, gold, or risk-free assets like CDs (certificates of deposit) and cash (in a high-yield savings account). Now that the tables have turned suddenly and viciously, retirees who fear President Trump’s next moves on the front of tariffs may be more willing to derisk and rebalance.

The tech- and growth-heavy Nasdaq 100 has officially fallen into a correction, now down close to 13% from its all-time high. The S&P 500 is not far from plunging into correction, now down just shy of 9% from its own high. Undoubtedly, it’s hard to tell when the market rout will end.

Retirees: Get ready to ride out the volatility

Given President Trump’s comments on markets, it seems like he’s no longer viewing it as a gauge of his performance. Could this change once stocks are back at new highs? Who knows.

Either way, he claims he’s not checking the stock market, but even without checking in on it on the day-to-day, it’s hard to steer clear of the aura of fear on Wall Street this past week. Indeed, tune into any news channel and you’ll get a sense of how unnerving a time it is to be an older investor.

For retirees seeking to rebalance, it’s best to check in with a financial advisor. This piece will check out two Vanguard ETFs that could fit the bill as options to rotate into if you’re looking to trim your equity exposure after the latest correction. While I do think it’s a tad late to be a big seller of stocks in favor of bonds, I do find the following Vanguard equity ETFs can allow cautious investors to get a better mix of income, growth, and, perhaps most importantly, a less choppy ride.

Vanguard Utilities ETF

First up, we have the Vanguard Utilities ETF (NYSEARCA:VPU), a sector-based ETF that has a higher yield (2.9%) than the S&P 500 and a much lower beta of 0.75. Indeed, the utility stocks tend to be underperformers when times are good and investors are more than willing to extend themselves on risk to make the most of a bull market. However, when the bear’s roar can be heard and the fear gauge shoots up over profound uncertainty, the utility stocks are a great place to be.

On Monday’s painful session that saw the S&P 500 tank close to 3%, the VPU actually edged up just north of 1%. Indeed, some rattled investors are already rotating to those “boring” defensive names that can offer a decent magnitude of growth through less-than-sanguine market environments.

If stagflation comes knocking, I expect the VPU to continue holding up better than the rest of the market. And while younger investors should aim to take advantage of the biggest pullbacks in technology and financial stocks, I do find that retirees who are in risk-off mode may find more comfort in steadier sectors of the economy. With the VPU down close to 6% from its high, I view the Vanguard ETF as compelling for the retired at a time like this. As with any Vanguard ETF, you’re getting a rock-bottom expense ratio (0.09%).

Vanguard U.S. Minimum Volatility ETF

For those who want even more stability (and still a decent amount of growth and income), the Vanguard U.S. Minimum Volatility ETF (VFMV) is also worth checking out. The expense ratio is a bit higher (0.13%) than the VPU but still very competitive for the “flavor” (low-volatility factor) you’re getting from the VFMV.

For retirees who prefer more of a one-stop-shop than a complement, the VFMV is arguably a better pick as it’s broadly diversified across sectors. You’re getting a decent amount of exposure to utilities (8.3%), telecoms (7.9%), health care (12.2%) and consumer staples (10.9%) — sectors you’ll want to be in when things get really choppy.

Underneath the hood, you’ll find consumer-packaged goods companies — think General Mills (NYSE:GIS) and Coca-Cola (NYSE:KO) — among other names that can fare better in a recession or stagflation. With a 1.4% yield and a 0.68 beta, you’re getting a smoother ride than the VPU, but about half the yield.