Investing can be hard. There are thousands of investment products -- and not all of them are very good. However, one asset class worth considering is exchange-traded funds (ETFs). For many investors, ETFs are a smart choice thanks to their diverse stock holdings, solid performance, and low fees.
Here, I'll break down a hypothetical $50,000 portfolio split equally among five different ETFs offered by Vanguard. Let's get started.
NYSEMKT: VGT
Key Data Points
Vanguard Information Technology ETF
First up is the Vanguard Information Technology ETF (VGT 2.70%). With a 10-year total return of 531% and a compound annual growth rate (CAGR) of 20%, it's hard to find a Vanguard ETF with a better performance history. The fund's top holdings are Microsoft, Apple, Nvidia, Broadcom, and Adobe.
| Company Name | Symbol | Percentage of Assets |
|---|---|---|
| Microsoft | MSFT | 20.5% |
| Apple | AAPL | 20.2% |
| Nvidia | NVDA | 5.1% |
| Broadcom | AVGO | 4% |
| Adobe | ADBE | 2.2% |
Data Source: Vanguard Group
Its expense ratio of 0.10% means you'll pay only $10 annually for every $10,000 you invest. Due to its heavy tech exposure, this isn't an ETF for every portfolio. But it's certainly one to consider for most investors.
NYSEMKT: VUG
Key Data Points
Vanguard Growth ETF
Next is the Vanguard Growth ETF (VUG 1.63%). This ETF boasts many large-cap growth stocks, meaning it's loaded with "Magnificent Seven" stocks like Microsoft, Apple, Nvidia, Alphabet, and Amazon.
| Company Name | Symbol | Percentage of Assets |
|---|---|---|
| Microsoft | MSFT | 13.2% |
| Apple | AAPL | 12.2% |
| Nvidia | NVDA | 6.5% |
| Amazon | AMZN | 6.5% |
| Meta Platforms | META | 3.9% |
Data Source: Vanguard Group
Given its focus on growth stocks, there's not much in the way of dividends; the ETF sports a dividend yield of only 0.6%. Performance-wise, the Vanguard Growth ETF has been above average over the last 10 years, delivering its investors a total return of 295%, which works out to a CAGR of almost 15%.
Moreover, with a tiny expense ratio of 0.05%, investors give up only $5 in fees for every $10,000 invested. To sum up, this is an ETF growth-oriented investors should strongly consider.
NYSEMKT: VOO
Key Data Points
Vanguard S&P 500 ETF
For investors looking to duplicate the performance of the S&P 500 with a low expense ratio, the Vanguard S&P 500 ETF (VOO 1.23%) is a name to remember. The ETF sports a minuscule expense ratio of 0.03%.
Since it tracks the S&P 500, its weighting currently reflects the top-heavy, tech-focused nature of the S&P 500, with Magnificent Seven stocks dominating its top holdings list.
| Company Name | Symbol | Percentage of Assets |
|---|---|---|
| Microsoft | MSFT | 7.3% |
| Apple | AAPL | 6.6% |
| Nvidia | NVDA | 3.7% |
| Amazon | AMZN | 3.5% |
| Meta Platforms | META | 2.1% |
Data Source: Vanguard Group
Yet, it also has other, more value-oriented names among its holdings. Healthcare and financial services stocks, for example, each comprise about 13% of the fund's total holdings.
You won't outperform the market with this ETF, but you will replicate its performance. And thanks to those rock-bottom fees, investors in this ETF won't give up an arm and a leg to do so.
NYSEMKT: VTI
Key Data Points
Vanguard Total Stock Market ETF
Next, there is the Vanguard Total Stock Market ETF (VTI 1.15%). This is the "kitchen sink" ETF. It has a little bit of everything. Sure, the Magnificent Seven stocks occupy its top holdings list, but beneath the surface, many other stocks and sectors are included.
| Company Name | Symbol | Percentage of Assets |
|---|---|---|
| Microsoft | MSFT | 6.3% |
| Apple | AAPL | 5.8% |
| Nvidia | NVDA | 3.1% |
| Amazon | AMZN | 3.1% |
| Meta Platform | META | 1.8% |
Data Source: Vanguard Group
Consumer cyclical stocks and industrial stocks comprise 11% and 10% of its holdings, respectively. What's more, its dividend yield of 1.4%, while still modest, gives income-oriented investors something to chew on. Like other Vanguard funds, this ETF boasts a low expense ratio of 0.04%.
NYSEMKT: VTV
Key Data Points
Vanguard Value ETF
Last, there is the Vanguard Value ETF (VTV 0.36%). Since value stocks have underperformed growth over the last decade, this ETF's 10-year CAGR of 10% has underperformed the market as a whole. Nevertheless, its performance isn't terrible, and it is worth having some value stock exposure in just about any portfolio.
The fund holds stocks across multiple sectors. Almost 21% of its holdings are financial services stocks, with a further 18% allocated to the healthcare sector. Top holdings include Berkshire Hathaway, Proctor & Gamble, Exxon Mobil, Merck, and JP Morgan Chase.
| Company Name | Symbol | Percentage of Assets |
|---|---|---|
| Berkshire Hathaway | BRK.B | 3.7% |
| Broadcom | AVGO | 2.8% |
| JP Morgan Chase | JPM | 2.7% |
| UnitedHealth Group | UNH | 2.5% |
| ExxonMobil | XOM | 2.2% |
Data Source: Vanguard Group
In addition to the fund's focus on value stocks, it also has the highest dividend yield of the five Vanguard ETFs covered. The fund boasts a dividend yield of 2.43%, and similar to the other Vanguard ETFs covered above, its slim 0.04% expense ratio means only a few dollars per year are lost to fees.
