Investing in Vanguard ETFs can be a strategic approach to building a diversified portfolio. In this article, we'll explore how to select the best Vanguard ETF, discuss the advantages of ETF investing, and highlight the top Vanguard ETFs to consider in 2025.
How to choose the right Vanguard ETF for your portfolio
Key advantages of iSelecting which Vanguard ETF to buy requires aligning your investment choices with your financial goals, risk tolerance, and time horizon. Here’s how to pick the best Vanguard ETF portfolio:
- Define your goals: Are you seeking long-term growth, steady income, or capital preservation? For example, a young investor focused on growth might opt for the Vanguard Growth ETF (VUG), while a retiree might prefer the Vanguard Total Bond Market ETF (BND) for stable income.
- Assess risk tolerance: High-growth ETFs like VUG are more volatile, while bond-focused ETFs such as BND provide stability.
- Diversify investments: The Vanguard ETFs list includes options covering domestic stocks, international markets, and fixed-income securities, allowing for a well-rounded portfolio.
- Evaluate Costs: Vanguard’s low expense ratios, such as VOO’s (Vanguard S&P 500 ETF) 0.03%, significantly enhance long-term gains compared to higher-cost funds.
- Analyze performance: Historical performance isn’t a guarantee of future results, but it offers valuable insights. For example, VOO has historically mirrored the robust growth of the S&P 500, making it a top performer.
Benefits of investing in Vanguard ETFs
Investing in Vanguard ETFs to buy in 2025 provides several benefits:
- Diversification: A single ETF can expose you to plenty of assets. For example, VTI (Vanguard Total Stock Market ETF) offers access to the entire U.S. stock market, reducing the risk of poor performance from individual stocks.
- Liquidity: ETFs trade like stocks, so investors can buy and sell them throughout the trading day at market prices.
- Cost efficiency: Vanguard’s low fees, such as BND’s 0.03% expense ratio, allow investors to retain more returns over time.
- Transparency: Vanguard ETFs disclose their holdings daily, ensuring investors know exactly what they own.
- Tax efficiency: ETFs are typically more tax-efficient than mutual funds due to their unique creation and redemption mechanism.
- Flexibility: Vanguard offers ETFs suitable for different accounts, including the best Vanguard ETF for Roth IRA, such as VIG (Vanguard Dividend Appreciation ETF) known for its dividend growth potential.
Eight top Vanguard ETFs to consider in 2025
Let’s take a detailed look at eight top Vanguard ETFs to consider in 2025, with real-world examples and performance data:
1. Vanguard S&P 500 ETF (VOO)
A popular choice for investors seeking exposure to large-cap U.S. companies, VOO tracks the S&P 500 Index. With an ultra-low expense ratio of 0.03% and a 10-year annualized return of approximately 12.5%, VOO can be the best Vanguard ETF to buy now for long-term growth. VOO is an attractive option for investors looking for stable growth aligned with the U.S. economy.
Historical performance: As of February 22, 2025, VOO has achieved an average annual return of approximately 12.5% over the past decade. In 2024, the ETF returned 26%, reflecting strong performance in the U.S. equity market.
2. Vanguard Total Stock Market ETF (VTI)
VTI covers the entire U.S. stock market, including small-, mid-, and large-cap stocks. With over 4,000 holdings, it’s a cornerstone for the best Vanguard ETF portfolio. VTI has delivered a 10-year annualized return of around 11%, making it ideal for investors interested in broad market exposure.
Historical performance: VTI delivered a 10.4% average annual return with a –51.3% maximum drop, recovering in 134 months. This makes it a reliable option for broad U.S. market exposure.
3. Vanguard Growth ETF (VUG)
Focused on large-cap growth stocks like Apple, Microsoft, and Amazon, VUG appeals to investors aiming for capital appreciation. With a 10-year annualized return of nearly 12%, it could be the best performing Vanguard ETF for growth-focused investors in 2025.
Historical performance: VUG shined with an 11.91% annual return over 30 years. Despite a tough -53.58% dip that took 144 months to recover, it consistently rewarded patient, growth-focused investors.
4. Vanguard FTSE Developed Markets ETF (VEA)
VEA covers developed markets outside the U.S., including Europe and Asia. With an expense ratio of 0.05% and over 4,000 international stocks, it plays a vital role in global diversification within any Vanguard ETFs list.
Historical performance: With a 7.4% average annual return and a –46.7% maximum decline, VEA recovered in 110 months. It’s a solid pick for global diversification.
5.Vanguard Value ETF (VTV)
VTV invests in undervalued large-cap U.S. stocks, including JPMorgan Chase and Johnson & Johnson. With a 10-year annualized return of about 10%, it’s suitable for investors seeking stable returns and lower volatility.
Historical performance: VTV averaged a 9.2% return with a –48.6% dip, rebounding in 128 months. Its focus on stable, income-generating stocks makes it appealing for conservative portfolios.
6. Vanguard Total Bond Market ETF (BND)
Among the best Vanguard bond funds, BND offers broad exposure to U.S. investment-grade bonds. With an expense ratio of 0.03%, BND provides a yield of around 4-5% as of early 2025, offering stable income and diversification from equities.
Historical performance: BND has provided steady 3–4% annual returns. With lower volatility, it’s perfect for investors prioritizing capital preservation.
7. Vanguard Dividend Appreciation ETF (VIG)
VIG focuses on U.S. companies with a strong track record of increasing dividends. With a 10-year annualized return of about 11% and an expense ratio of 0.06%, VIG is a top contender for the best Vanguard ETF for Roth IRA, providing tax-efficient income growth.
Historical performance: VIG returned 16.9% annually, with a –44.8% drop and recovery in 115 months. Its focus on dividend growth makes it attractive for income-focused investors.
8. Vanguard Total International Stock ETF (VXUS)
VXUS includes over 7,000 non-U.S. stocks, offering comprehensive international exposure. With a 10-year return of approximately 5,4%, it’s ideal for investors seeking to diversify globally. VXUS is essential in a well-rounded Vanguard ETF portfolio, especially for those wanting to mitigate U.S.-centric risks.
Historical performance: VXUS delivered a 5.8% annual return, with a –48.2% dip and a 122-month recovery. It’s great for investors seeking global diversification.
Conclusion
Choosing the best Vanguard ETF to buy now involves balancing performance, risk, and diversification. The top Vanguard ETFs discussed here cater to various investment strategies. For retirement accounts like Roth IRAs, options such as VIG and BND stand out as the best Vanguard ETF for Roth IRA due to their income and stability profiles. Always consider your long-term financial goals and reassess your portfolio regularly to ensure it aligns with your evolving needs. The comprehensive Vanguard ETFs list ensures there’s a suitable option for every investor aiming for growth, income, or balanced returns in 2025.
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