To say there's uncertainty in the market right now would be an understatement. The volatility stemming from President Donald Trump's tariffs is, understandably, causing many people to look for investments that are more diversified than buying individual stocks.
That's a logical strategy as it gets increasingly difficult to decode how tariffs will impact specific companies. And one strategy that's gained a lot of momentum lately is investing in exchange-traded funds (ETFs), which spread your investment across many stocks.
Vanguard is the largest provider of ETFs by investment amount, and the company also charges some of the lowest expense ratios in the industry. If you're in the market for a Vanguard ETF, here are two to buy now and hold for years, and one to avoid.
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Buy No. 1: Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO +1.39%) was already a popular fund before tariffs came along, but it's exploded in investor interest since tariffs were announced. Recent Bloomberg data shows that the fund received $21 billion in inflow -- the amount investors have put into the ETF -- in April alone. That's the most inflow in the fund's 15-year history and the fifth-largest ever into any fund in a single month.
The two things that make the Vanguard S&P 500 ETF appealing are that it's well diversified and inexpensive to own. For example, the fund tracks the S&P 500, so your investment is spread across the largest 500 publicly traded U.S. companies.
Putting your money into the S&P 500 has been a very wise move, historically. The average historical annual return of the S&P 500 since 1957 is 10.1%. And against the backdrop of tariffs, it's worth pointing out that the S&P 500 has remained very resilient, bouncing back after terrible economic times, including the Great Depression, two world wars, the dot-com bust, and the Great Recession.
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In addition to its diversification, Vanguard's S&P 500 ETF charges a very low 0.03% expense ratio. That means for every $10,000 you have invested in the fund, you'll pay an annual fee of just $3.
If you've got a long investment horizon and prefer to spread your money out across many companies and sectors (as opposed to picking individual stocks), then you'll probably like Vanguard's S&P 500 ETF. It's where I have most of my money invested, as do millions of other well-diversified investors.
Buy No. 2: Vanguard S&P 500 Growth ETF
If you want strong diversification but want a little more focus on growth-oriented stocks, then the Vanguard S&P 500 Growth ETF (VOOG +1.51%) may be just what you're looking for. This fund consists of over 200 growth companies in the S&P 500.
The companies included are chosen based on a few key characteristics, including strong sales growth, improving profitability, and share price momentum. Since these growth companies are chosen from the S&P 500, they're some of the largest and most stable companies, making the fund well diversified.
And while there's no guarantee of future returns, the Vanguard S&P 500 Growth ETF has put up some impressive past returns. Over the past decade, it's gained 257%, easily outpacing the S&P 500's 221% gains.
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You'll also pay a relatively low expense ratio of 0.07%. While higher than Vanguard's S&P 500 ETF fees, it's still below the industry average of 0.14%. That means your fees for the fund are half of what many other ETFs are charging.
One to avoid: Vanguard Global ex-U.S. Real Estate ETF
The Vanguard Global ex-U.S. Real Estate ETF (VNQI +1.39%) is composed of international real estate investment trusts (REITs) and real estate development companies. While there are times when foreign housing markets are booming, current macroeconomic uncertainties are instead causing headwinds.
For example, overbuilding in China has caused very significant problems in the country, with an estimated 90 million empty homes as of last year, about one-third of which were never finished or sold. Similarly, Japan's shrinking population has left about 9 million homes empty.
President Trump's tariffs are hurting some housing markets as well. Europe had previously experienced a housing rebound, with three consecutive quarters of sales growth, but European property sales fell 11% year over year in the first quarter of 2025 as tariff uncertainty caused buyers to tap the brakes.
As countries navigate tariffs and face economic uncertainty, now isn't a good time to invest in the Vanguard Global ex-U.S. Real Estate ETF. Instead, investors should consider the two other Vanguard ETFs mentioned here, which have proved their mettle over time.
