Investing doesn't have to be complicated. After all, low-cost exchange-traded funds (ETFs) that are passively managed have historically outperformed most professional investors and actively managed funds alike.
Below is a nuts and bolts overview of three Vanguard growth ETFs that epitomize the simple, cost-efficient approach to investing and could serve as the backbone of a well-diversified portfolio. Read on to find out more about these popular funds.
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1. Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO +0.39%) is designed to track the performance of the S&P 500 index, which is composed of 500 of the largest U.S. companies. Established on Sept. 7, 2010, the VOO offers a way for investors to mirror the market's performance through a single investment.
NYSEMKT: VOO
Key Data Points
As of this writing, this Vanguard S&P 500 ETF has delivered an average annual return of approximately 14.4% since inception. It also offers a decent dividend yield of 1.38% and an ultra-low expense ratio of 0.03%. This ETF is a solid vehicle for investors seeking exposure to U.S. large caps in a low-cost manner.
2. Vanguard Growth Index Fund
The Vanguard Growth Index Fund (VUG +0.23%) aims to track the CRSP US Large Cap Growth index, which includes U.S. large-cap growth stocks. Since its launch on Jan. 26, 2004, this ETF has been a top vehicle for investors searching for a convenient way to invest in many of the largest growth companies.
NYSEMKT: VUG
Key Data Points
Since its launch, the Vanguard Growth Index Fund has delivered a stellar 11.2% average annual return. The fund's expense ratio is slightly higher than the Vanguard S&P 500 ETF, but more than reasonable at 0.04%. The average expense ratio among similar funds is a far richer 0.96%.
Distribution-wise, the growth fund pays a modest 0.53% annualized yield, which is substantially lower than the S&P 500 fund, as well as most large-cap stocks.
The Vanguard Growth Index Fund screens as a cost-effective and simple way to target some of the fastest-growing companies in the world. However, it isn't exactly an ideal income vehicle, due to its modest yield.
3. Vanguard Information Technology Index Fund
The Vanguard Information Technology Index Fund (VGT +1.27%) provides exposure to stocks that track the MSCI US Investable Market Information Technology 25/50 index. This information technology specialty fund comes with an attractive expense ratio of 0.10%, a meager yield of 0.69%, and a stellar line-up of companies operating in the high-growth field of artificial intelligence (AI).
Launched on the same date as the Vanguard Growth Index Fund, the information technology fund has generated a handsome 13.2% average annual return over this period. However, the fund has shined over the past 10 years, evidenced by its 20.4% average annual return since 2014. That said, the Vanguard Information Technology Index Fund is widely considered riskier than the other two funds I've discussed, due to its heavy concentration in information technology.
Final thoughts
These three funds represent a cross section of Vanguard's diverse offerings that cater to investors who want to grow their portfolios with minimal effort. Their low expense ratios and stellar track records make them a compelling choice for busy investors.
Whether you're looking to mirror the broader market, tilt your portfolio toward large-cap growth stocks, or focus on ultra-high-growth technology stocks, these three Vanguard ETFs provide accessible options that can achieve these goals.
