Vanguard is one of the ETF industry's powerhouses, managing 75 different funds and accounting for roughly $1.5 trillion in total assets managed. It's accomplished thanks to its reputation as THE low cost leader in the industry, a blueprint that many issuers have now replicated.
If you're looking to build a portfolio or simply round out your existing portfolio, Vanguard is a great place to use. Most of its ETFs are fairly vanilla and broad-based. That's not necessarily exciting for investors looking for the next flashy theme or niche, but it's perfect for creating an ultra-cheap, well-diversified long-term portfolio.
Sifting through 75 different ETFs can be a bit much, so I want to narrow the menu down to a mere 11 names that are perfect for including in a long-term portfolio. Because they're all great core holdings, these are funds that you can buy and hold forever.
Vanguard Total Stock Market ETF (VTI)
This fund is perhaps the ideal holding if you want the broadest possible U.S. stock market coverage. It holds large-, mid- and small-caps across both value and growth styles. Even better, it charges a mere 0.03% annually, or just $3 for every $10,000 invested, to own this portfolio. You may not find a better deal anywhere in the ETF world.
Vanguard S&P 500 ETF (VOO)
Maybe you want to stick with just large-caps instead of venturing into riskier small company stocks. VOO, which is Vanguard's 2nd largest ETF, simply matches the S&P 500 and makes another great portfolio cornerstone. Like VTI, it also charges just 0.03% annually.
Vanguard Real Estate ETF (VNQ)
Along with stocks and bonds, real estate is considered by many to be the 3rd major asset class. Some folks suggest that real estate should be about 10% of your overall portfolio, but the S&P 500, for example, only has a 2.5% allocation to the sector. VNQ can be used to raise your real estate allocation and fill in the gaps that funds, such as VTI and VOO, may have.
Vanguard Dividend Appreciation ETF (VIG)
VIG is probably one of my three favorite dividend ETFs. It's the prototypical dividend growth ETF requiring qualifying components to have at least 10 consecutive years of annual dividend increases (although it does eliminate REITs). Targeting dividend growers is one the most popular income strategies among dividend seekers and VIG is one of the best.
Vanguard High Dividend Yield ETF (VYM)
VYM, as the name suggests, targets stocks that pay above average dividend yields. Because it is market cap weighted, it skews heavily towards well-known large-cap names, Like VIG, it also ignores REITs, which reduces some of the high yield potential but also reduces some portfolio risk.
Vanguard Total Bond Market ETF (BND)
BND could be considered the fixed income version of VTI. "Total" might be a bit of a misnomer because it only targets investment-grade bonds, but it spreads its investments across both Treasuries and corporates. BND has nearly 2/3 of assets dedicated to government bonds, which is a little on the heavy side, so you might consider augmenting this with another corporate bond ETF.
Vanguard Short-Term Inflation Protected Securities ETF (VTIP)
Inflation protection hasn't really been a major market concern, but it's nice to own TIPS for an added degree of safety. Most portfolios should include at least some allocation to Treasury inflation protected securities and VTIP's focus on the short end of the maturity spectrum makes this a safer pick.
Vanguard Total World Stock ETF (VT)
If you truly want total stock market exposure, here's your fund. VT combines a U.S. total market portfolio with an international total market portfolio to provide equity coverage from virtually every corner of the world. The Vanguard Total World Bond ETF (BNDW) would be an ideal complement to VT.
Vanguard Total International Stock ETF (VXUS)
VXUS provides diversified exposure to both developed and emerging markets worldwide excluding the United States. With an expense ratio of just 0.08%, you'll be hard-pressed to find a cheaper option for investing in foreign stocks.
Vanguard Short-Term Treasury ETF (VGSH)
Vanguard doesn't have a total Treasury market bond ETF, but offers choices across all maturities, including long-, intermediate- and short-term options. Any of the Treasury-focused ETFs would work depending on your goals, but VGSH, which targets 1-3 year maturities, is my representative choice here.
Vanguard ESG U.S. Stock ETF (ESGV)
Socially conscious investing has grown in leaps and bounds in 2020 and the trend figures to only keep growing. Vanguard debuted ESG-focused stock and bond funds recently and would be good choices for those wishing to omit things, such as weapons, alcohol and tobacco, from their portfolios.