For most investors, creating a balanced portfolio should be a goal. Now, this can take on many forms, and there is no single solution that fits everyone. After all, investors' portfolios will look different depending on their age, risk tolerance, and goals.
I'd also encourage most investors who are not drawing from funds in retirement to use a dollar-cost averaging strategy when investing in exchange-traded funds (ETFs). This is where you invest a set amount each month, regardless of the market's current trading position. This helps you avoid trying to time the market and helps you build wealth over time.
That said, let's examine four Vanguard ETFs that can serve as the foundation for a comprehensive portfolio.
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1. The Vanguard Total Market ETF
As the name suggests, the Vanguard Total Stock Market ETF (VTI 0.09%) provides investors with exposure to the entire stock market, including mid-cap and small-cap stocks. The fund tracks the CRSP US Total Market Index, which comprises over 3,500 stocks listed on the New York and Nasdaq stock exchanges.
NYSEMKT: VTI
Key Data Points
That said, large-cap stocks still make up the bulk of its portfolio, as it is a market capitalization (market cap) weighted index. However, you're still getting some smaller stock investments, and it's not nearly as top-heavy as the S&P 500.
The ETF has been a solid performer, generating an average annual return of 14% over the past decade.
2. The Vanguard Growth Index
With a base of the entire U.S. stock market, it could be a good idea to supplement that with a fund focused on leading growth stocks. After all, this is the segment that has been helping power the market higher for the past decade. The Vanguard Growth Index (VUG +0.06%) is a great option, as it is essentially the growth component of the S&P 500.
NYSEMKT: VUG
Key Data Points
The ETF is heavily weighted toward tech stocks, which make up more than 60% of its portfolio. With this ETF, you're getting a heavy concentration in tech leaders like Nvidia, Microsoft, and Apple.
The fund has been a great performer over the years, with a yearly return of 17.4% over the past decade.
Vanguard International High Dividend Yield ETF
With the U.S. stock market and growth stock covered, the Vanguard International High Dividend Yield ETF (VYMI 0.07%) is a nice way to add some international stocks to the mix. It is also more geared toward value stocks that have above-average dividend yields, so it differs significantly from the other two ETFs listed above.
NASDAQ: VYMI
Key Data Points
The ETF tracks the FTSE All-World ex US High Dividend Yield Index, and invests in dividend-paying stocks outside the U.S. Approximately 43% of its portfolio comprises European companies, 26% from the Asia Pacific region, 8% from Canada, and over 20% from emerging markets.
While it hasn't been around as long as some Vanguard ETFs, it has a solid track record, recording an average annual return of more than 13% over the past five years.
Vanguard Total Bond Market ETF
I personally am not a big fan of investing in bonds, as the returns have just not been great in recent years. And while bond investing is considered less risky than investing in stocks, it is far from risk-free.
However, for investors who do want some bonds in their portfolio, the Vanguard Total Bond Market ETF (BND 0.14%) is a solid option that invests in a combination of government, corporate, and mortgage-backed securities. The fund owns over 11,000 bonds.
NASDAQ: BND
Key Data Points
Like most bond funds, its performance hasn't been anything to write home about. It's only averaged a 1.9% yearly return the past 10 years and is down 0.2% a year the past five. As I said at the beginning, this is why I prefer not to invest in bond funds.
However, the ETF has rebounded this year, up about 6.7% in 2025, and if the Federal Reserve pushes interest rates lower, intermediate and long-term bond funds should perform better in the coming years.
