In this piece, we’ll have a closer look at three of the most popular Vanguard ETFs out there. Undoubtedly, there’s quite a bit of overlap between many of these go-to ETFs. In any case, they remain a stellar option for passive investors looking for broad exposure and the absolute lowest expense ratios out there.
Though choosing to stock-pick ones way to market-beating returns is a worthy pursuit for some of the more experienced investors out there, especially as concentration risks rises with funds that passively follow something like the S&P 500 or something broader, you really can’t go wrong with any one of the Vanguard ETFs if you’re out of ideas for individual names to buy (mixing single stocks and ETFs is a smart move, especially for beginning DIY investors) or if you’re looking to automate your investing with something quick, easy, and effective.
In any case, let’s go over three of Vanguard’s most popular options nowadays and see which standout ETFs might be worth your hard-earned investment dollars in today’s frothy-looking, AI-driven stock market.
Vanguard S&P 500 ETF
First, we have the Vanguard S&P 500 ETF (NYSEARCA:VOO), which is pretty much the go-to if you’re looking to bet on the S&P 500 while keeping your expense ratio low and your liquidity high. As the name of the VOO suggests, it follows the S&P 500. In other words, it is the market, and by buying the VOO, you’re going to get market returns. Nothing more, nothing less. Some think that settling for the S&P is to leave excess risk-adjusted returns on the table.
However, if you don’t have time or are simply fine with buying the broad market (even with its concentration in the big-tech stocks), there’s no problem with buying the VOO after every paycheck without having to think too much about it. In fact, it might be better to buy the VOO, regardless of what the price action is.
If you bought six months ago, when everyone was running scared over the Liberation Day tariffs, you went on to enjoy a gain of more than 35% in the following six months. Indeed, sometimes “settling” can be richly rewarding. And while a multitude of S&P 500 ETFs are available, I think you can stop with the VOO, which has a 0.03% expense ratio, making it one of the most efficient ways to own the market.
Vanguard FTSE Developed Markets Index Fund ETF
The Vanguard FTSE Developed Markets Index Fund ETF (NYSEARCA:VEA) is an increasingly popular ETF among American investors and for good reason. The domestic stock market is certainly getting a bit lofty. And with the non-stop chatter about AI bubbles and how the powerful bull market will end, the case for diversifying outside of the U.S. seems as strong as it’s been in a while. Like the VOO, the VEA has a rock-bottom 0.03% expense ratio, making it an easy buy for international diversification.
Furthermore, the developed markets have been a source of solid, S&P-beating gains this year, with the VEA up just shy of 28% year to date versus the VOO’s 15% gain. Can the relative outperformance continue? It’s tough to tell, but there’s still a striking valuation gap between the U.S. and the rest of the world.
The big question investors should ask is whether America’s AI advantage is worth the relative premium. Personally, I think it is. But that doesn’t mean you shouldn’t diversify internationally if you’re already heavy, if not all-in, on U.S. stocks.
Vanguard Emerging Markets Stock Index Fund
Vanguard Emerging Markets Stock Index Fund (NYSEARCA:VWO) is a great complement to the developed markets-focused VEA. With emerging markets, there’s more growth, but a choppier ride might also be in the cards.
With considerable exposure to Chinese stocks, there’s also added risk. However, if you’re looking for a way to bet on the number-two AI superpower out there alongside other intriguing high-growth companies from across the globe, I think the VWO is an incredibly low-cost way to go, with its 0.07% expense ratio.
If you’re already in the VOO and VEA, I think the VWO is a solid addition that allows investors to score greater value and underappreciated growth prospects. For investors looking to buy one of the following Vanguard ETFs, I’d encourage you to ask yourself what your portfolio is lacking. Do you lack international exposure? Are you
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