Vanguard pioneered index investing back in the 70s, and is now one of the most well-respected brokers in the world. Here are their top 17 funds and ETFs---something for every kind of investor.

You already know that diversifying your portfolio is crucial. What’s even more important is getting the right mix, and not over-diversifying.

Thankfully, there are plenty of brokers out there who offer pre-diversified funds so you don’t have to worry about doing it yourself. Vanguard is one of the most well-respected brokers out there, and they offer a wide array of funds—enough to suit every investor’s particular need. I’ve chosen 17 funds of theirs that I think are great picks for young investors.

Why only Vanguard funds, you ask?

Vanguard sets itself apart in a number of ways, but I’ll call out just a few:

  • They manage their funds in house.
  • They also don’t allow outside investment from entities like another fund management company, which would probably increase their profits. Instead they push more of their return to their clients. 
  • They’ve been around for a long time—their founder, John Bogle, created the first index fund in 1975.
  • Their fees are some of the lowest in the industry.
  • They work with robo-advisors like Betterment.

That last point may be most important to you. Most financial advisors will have you picking a few individual stocks, or maybe a few higher cost mutual funds.

Robo-advisors like Betterment, though, choose low-cost ETFs managed by brokers with years and years of expertise. Actually, one of the main reasons I just opened a Betterment account was because it gave me easy access to cheap Vanguard funds.

While only a couple of the funds on this list are used by Betterment, you may be able to find them with other robo-advisors, or simply invest in them on your own. Regardless, the below list features the absolute best Vanguard funds I’ve found. Take a look:

For the bond-lover

1. Total Bond Market ETF (BND)

  • Expense ratio: 0.06%
  • 10-year average return: n/a
  • 5-Year average return: 3.53%

Bonds are a key part of any diversified portfolio. The Total Bond Market ETF is a great choice if you want a broad mix of investment-grade bonds. It holds nearly 46% in government bonds, 28% in corporate bonds, 22% in securitized bonds, and just under 1% municipal bonds, all with a variety of ratings. With a decent five-year average return and a super low expense ratio, this is a great fund to have in your portfolio.

Learn more about bonds here.

2. Short-Term Government Bond ETF (VGSH)

  • Expense ratio: 0.10%
  • 10-year average return: n/a
  • 5-Year average return: 0.66%

Don’t let the small five-year average return scare you. This is the exact type of bond ETF that is recommended by Warren Buffet. The fund is almost entirely made up of government bonds (hence the name) and has a decent expense ratio. If you’re following Buffett’s simple investing advice and putting 10% of your money in short-term government bonds, this is the fund for you.

For the value investor

3. High Dividend Yield ETF (VYM)

  • Expense ratio: 0.09%
  • 10-year average return: n/a
  • 5-Year average return: 14.32%

Not long ago, I talked about the benefits of value investing with you. In value investing, one of the rules is to look for companies that pay strong dividends. This fund, rated five stars by Morningstar, gives you exposure to large, well-established companies that pay nice dividends. The top five holdings are Microsoft, Exxon Mobil, Johnson & Johnson, General Electric, and AT&T. Those are some pretty sound companies. If dividends are your thing, this fund should be a staple of your portfolio.

Learn more about value investing here.

For those who think (really) big

4. Mega Cap ETF (MGC)

  • Expense ratio: 0.09%
  • 10-year average return: n/a
  • 5-Year average return: 13.26%

If you want to invest in some huge companies, consider this fund. Most, if not all, of these companies exceed $100 billion in market cap. Some of the more notable companies this fund invests in are Apple, Amazon, Berkshire Hathaway (Warren Buffett’s company), Alphabet Inc (Google), and Facebook.

For those who like large, established companies

5. S&P 500 ETF (VOO)

  • Expense ratio: 0.05%
  • 10-year average return: n/a
  • 5-Year average return: 13.33%

As I mentioned above, Warren Buffett’s recommended investing plan is 10% of assets in short-term government bonds, and 90% in a S&P 500 index. Well, here’s how to get your 90% in the S&P 500. It has the lowest expense ratio of any ETF that tracks the S&P 500, too. Rated five-stars by Morningstar, this fund gives you a broad mix of established companies like Coca-Cola, PepsiCo, Intel, and Wells Fargo.

6. Total Stock Market ETF (VTI)

  • Expense ratio: 0.05%
  • 10-year average return: 7.98%
  • 5-Year average return: 12.97%
  • Available with Betterment

It feels like this ETF has been around forever. Dubbed “the quintessential core stock holding” by Morningstar, the fund focuses on technology, health care, and financial services. With a long-standing track record, over $60 billion in assets, and an extremely low expense ratio, this fund is a great centerpiece to build your portfolio around.

For the mid-cap guru

7. Mid-Cap ETF (VO)

  • Expense ratio: 0.08%
  • 10-year average return: 8.53%
  • 5-Year average return: 12.35%

Balancing a portfolio with mid-cap stocks ($2-10 billion in market cap, so still plenty big) is necessary for strong diversification. This ETF holds companies like NVIDIA Corp (they specialize in graphics cards for computers), Electronic Arts Inc (makers of Madden NFL), and JM Smucker. You don’t want to leave mid-cap stocks out of your portfolio, and this fund is an excellent pick.

For those who love the little guys

8. Small-Cap ETF (VB)

  • Expense ratio: 0.08%
  • 10-year average return: 8.66%
  • 5-Year average return: 11.81%

Like mid-cap stocks, you’ll want to be sure you have a blend of small-cap stocks as well. The Small-Cap ETF has a low expense ratio and a pretty nice balance of industry exposure. One thing I personally like about this fund is their allocation of real estate and financial stocks. Their allocation of real estate stocks is well above the category average and their allocation of financial stocks is well below. I just like real estate stocks over financial stocks in most cases. The average annual returns are tempting, too.

For those who invest across the pond

9. FTSE Developed Markets ETF (VEA)

  • Expense ratio: 0.09%
  • 10-year average return: n/a
  • 5-Year average return: 3.37%
  • Available with Betterment

This is an excellent fund if you’re looking for international exposure. The FTSE Developed Markets ETF is low-cost and invests in companies in developed markets. It’s also one of the cheapest international funds out there. The majority of the stocks in this fund are large global companies that also have a ton of exposure in the US, like Nestle, Toyota, and BP. It also has a low 3% turnover rate, meaning the fund keeps most of the stocks it invests in for the long-haul.

10. Total International Stock ETF (VXUS)

  • Expense ratio: 0.13%
  • 10-year average return: n/a
  • 5-Year average return: 1.72%

Similar to the fund mentioned above, but this one has a major difference: It invests in emerging markets. Think of an emerging market as one that is nearly developed, but still has some growth to do. Companies in these markets are more volatile, but have potential for greater returns. The Total International Stock ETF has about 15% of its money in emerging markets, while the VEA fund (mentioned above) has less than half a percent in emerging markets.

For those who want to take over the world

11. Total World Stock ETF (VT)

  • Expense ratio: 0.14%
  • 10-year average return: n/a
  • 5-Year average return: 6.98%

If you want a fund that represents almost all of the world’s investable markets, this is for you. The Total World Stock ETF accounts for 98% of the globe. This is total exposure to all markets at its finest. It breaks down to about 50% US stocks, 40% international developed market stocks, and 10% in emerging markets.

Learn more about investing in foreign markets here.

For the health-y investor

12. Health Care ETF (VHT)

  • Expense ratio: 0.09%
  • 10-year average return: 11.47%
  • 5-Year average return: 19.16%

Yeah. Look at those returns. Health care can provide huge returns, but is also quite volatile, so make sure you balance it with other funds. The Health Care ETF invests in health care companies primarily located in the United States. It has about 10% of its portfolio in Johnson & Johnson and 6% in Pfizer—two of the largest health care companies in the world. The expense ratio is favorable for this type of fund, as well.

For the industrialist

13. Industrials ETF (VIS)

  • Expense ratio: 0.10%
  • 10-year average return: 8.32%
  • 5-Year average return: 13.44%

Industrials is a pretty broad market. For example, here are the top companies in the Industrials ETF, by portfolio weight: General Electric, 3M, United Technologies, Honeywell, and Boeing. So light bulbs, washers, dryers, velcro, air purifiers, and airplanes, all in just the top five. This is a great fund to have as a supplement to some other core funds, but just remember that industrial stocks are cyclical, so you may see some ups and downs with this one.

For the shopaholic

14. Consumer Discretionary ETF (VCR)

  • Expense ratio: 0.10%
  • 10-year average return: 11.06%
  • 5-Year average return: 16.40%

You’ll love this one. The Consumer Discretionary ETF invests in all kinds of consumer spending firms located in the U.S. So pretty much any type of industry where you can go out and spend your money, this fund has a company for it. For instance, Amazon, Home Depot, Disney, and McDonald’s are some of its top holdings. It’s had historically strong returns and a reasonable expense ratio. I’d try to sneak this one into your portfolio if you can.

15. Consumer Staples ETF (VDC)

  • Expense ratio: 0.10%
  • 10-year average return: 11.51%
  • 5-Year average return: 15.25%

Typically, consumer staple stocks perform best when the economy is facing a recessionary period. It’s nice to have a fund like this in your portfolio to balance everything else out. That’s also not to say you won’t get good returns in a normal economic environment, or a growing one, but history tells us that these do well during down periods. Some of the major holdings are Altria, Coca-Cola, and Philip Morris, so you may have to check your conscience at the door.

For the IT nerd

16. Information Technology ETF (VGT)

  • Expense ratio: 0.10%
  • 10-year average return: 11.01%
  • 5-Year average return: 14.15%

If I had to guess one fund that you will surely buy, it’s this one. Millennials will love the Information Technology ETF. It has a history of showing absurdly high returns and it invests in tech companies that everyone knows, loves, and uses. Apple, Microsoft, Facebook, and Alphabet (Google) weigh out as the top holdings of the portfolio. You’ll also get Intel, Oracle, PayPal, Adobe, and many other established tech companies. This fund holds 381 stocks in total, and I highly recommend it as part of your mix.

For the wannabe real estate magnate on a budget

17. REIT ETF (VNQ)

  • Expense ratio: 0.12%
  • 10-year average return: 7.65%
  • 5-Year average return: 13.00%

I think that everyone should have some exposure to real estate in their stock portfolio. REITs let you do that without the nonsense of buying physical property. The REIT ETF allows you to get into real estate at a very low cost. Believe it or not, this is one of the cheapest REIT ETFs available. Expect some volatility, as real estate goes, and the fund turns over about 11% of its 150 stocks every year. While I wouldn’t make it the core of your portfolio, I do think some exposure is necessary.

Summary

Determining the best Vanguard funds to invest in can be overwhelming. They offer a lot, and this list doesn’t even touch on mutual funds. Choose wisely, and invest in what makes sense for you. You want to diversify, but not over-diversify.

Read more:

Recommended Investing Partners

  • Recommended M1 Finance gives you the benefits of a robo-advisor with the control of a traditional brokerage. M1 charges no commissions or management fees, and their minimum starting balance is just $100. Visit Site
  • No Minimum Low-fee robo-advisor with no minimum investment. Creates fully-automated portfolios based upon your desired allocation. Visit Site
  • $500 Minimum Wealthfront requires a $500 minimum investment and charges a very competitive fee of 0.25% per year on portfolios over $10,000. Visit Site

Related Tools

About the author

Chris Muller picture
Total Articles: 191
Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He’s also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016. You can connect with Chris on Twitter.

Article comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.
3 comments
adam says:

This article was great! Thank you so much! However how much of each of these would you recommend % wise? Like if I have 100k to invest, what % of each of these would one allocate safely if I wanted to use this as a long term goal.

JB says:

Hey Chris,

Great article. But quick question, what are your thoughts on VTSAX & VASGX?

Katherine says:

Investing scares me so much. I have an account with Vanguard through work, so this is helpful.