In the exchange-traded funds (ETFs) industry, Vanguard is an undisputed force, with 116 such funds trading in the U.S. That number covers many asset classes, with only a few notable gaps (no gold or cryptocurrency) in the issuer's lineup. (Amazingly, two upstart issuers have exceeded that tally just this year with their new ETF launches.)
The point is, Vanguard has a little something for everyone, including investors who are aiming for long-term growth, and who doesn't love that? Here's a trio of Vanguard ETFs that deliver growth in a variety of ways.
Image source: Getty Images.
Lots of growth leaders under one umbrella
Signs point to widening market breadth, and that's a good thing. More participation in a bull market can fan those flames for longer. That said, megacap growth stocks have been the primary leaders of the current bull market until recently. Count the Vanguard Morningstar Mega-Cap Growth ETF (MGK +0.42%) among the beneficiaries of that trend.
This growth ETF, which tracks the Morningstar US Mega Cap Growth Index, lives up to its billing as one-stop shopping for megacap growth fare. The fund is home to 56 stocks with a median market capitalization of $1.8 trillion. One way of looking at this Vanguard ETF, and an accurate one at that, is that it's well-suited for investors who want broad exposure to the largest artificial intelligence (AI) names without having to stock-pick in that group or own dozens of stocks individually.
Investors should have diverse portfolios with multiple stocks, but owning dozens of AI stocks isn't practical for many. So, let this fund do the heavy lifting. It's also good for exposure to Nvidia and Apple, as they together account for more than a quarter of this ETF's roster, given that this is a market-cap-weighted fund.
NYSEMKT: MGK
Key Data Points
This Vanguard ETF returned more than 90% over the past five years, confirming that it delivers when growth is in style. With an annual fee of just 0.05%, or $5 on a $10,000 stake, this fund is perfect for cost-conscious investors who believe in AI's long-term trajectory.
Bonds? Believe it.
Taking a break from stocks for a moment (don't worry, back to our regularly scheduled programming shortly), it's widely believed that when it comes to bonds versus stocks, the former lack growth prospects relative to the latter. Broadly speaking, that's true, but the Vanguard Emerging Markets Government Bond ETF (VWOB +0.18%) proves investors can have their cake (income) and eat it, too (some growth).
Home to 924 bonds, this $6.3 billion Vanguard ETF returned 9.6% over the past five years, and its 30-day Securities and Exchange Commission (SEC) yield of 6.1% is nearly 150 basis points ahead of the yield on the Bloomberg US Aggregate Bond index. In other words, this Vanguard bond fund is compensating investors for added risk, as more than 41% of its holdings are junk-rated.
Credit risk is something bond investors should always be mindful of, but the good news with this ETF is that its largest country weights, such as Saudi Arabia and Mexico, aren't likely to default.
NASDAQ: VWOB
Key Data Points
More good news: While many investors overlook emerging markets debt, the under-owned asset class has outperformed both emerging markets stocks and U.S. high-yield corporate bonds over the long term. This Vanguard ETF charges 0.15% annually, far below the category average fee of 0.95%.
A dividend dynamo
Growth comes in a variety of forms, and the right blue chip dividend stocks can deliver it. The Vanguard High Dividend Yield ETF (VYM +0.14%) proves as much. No, this fund won't keep pace with the growth counterpart highlighted earlier, but that's not a knock on dividend investing.
Actually, this ETF serves a variety of positive functions. The fund can smooth out some of the bumps that can arise in growth-heavy portfolios, and it can certainly generate dependable income. To the latter point, while this ETF is advertised as a high-yield fund, the reality is that many of its 605 holdings aren't yield traps, but many have payout-increase streaks measured in decades.
For this ETF to outperform a growth fund, value investing would have to come back into style in a big way. Those are the breaks when a fund allocates about 48% of its portfolio to financial services, industrial, and healthcare stocks. Still, this Vanguard ETF has more than tripled over the past decade and is less volatile than the Russell 1000 Value index.
This fund is accommodating to long-term investors for another reason. It charges just 0.04% per year, far below the category average of 0.85%.
