Exchange-traded funds are sweeping the world, making investing simpler for millions of investors. In fact, they're so popular that it's become almost impossible even to stay aware of every single one of the roughly 1,350 ETFs out there -- let alone figure out which ETFs are most deserving of your hard-earned investment dollars.

But to help get you pointed in the right direction, I've taken a look at some of the biggest families of exchange-traded funds available to today's investors. Having looked at State Street's SPDRs two weeks ago and iShares' last week, let's turn to a company that's best known for a low-cost philosophy that could save you huge amounts in fees: Vanguard.

A cheapskate's dream
Vanguard has been around a lot longer than the first ETF. But ever since John Bogle founded the company in 1974, Vanguard's focus has been on making investing cheaper for everyday investors. With the introduction of the 500 Index Fund in 1976, Vanguard set the stage for the passive index-based strategy that the overwhelming majority of ETFs now use today.

That said, the fund shop was actually a relative latecomer in embracing ETFs. It was 2001 by the time Vanguard listed its first ETF, Vanguard Total Stock Market (NYSE: VTI), as a broader-market alternative to popular index ETFs like the SPDR S&P 500. Part of that is likely due to resistance from within: Bogle himself still believes that ETFs encourage short-term thinking and that traditional mutual funds do a better job of keeping people invested for the long run.

Now, though, Vanguard has fully embraced exchange-traded funds. In fact, a large number of its index mutual funds now have ETF equivalents that from a structural standpoint are almost identical.

The best of the cheapest
With almost 50 ETFs to choose from, Vanguard does a good job of giving its customers an easy way to build a diversified portfolio. Consider this selection from its extensive menu:

  • In emerging markets, Vanguard has taken the lead from iShares, as its Vanguard MSCI Emerging Markets (NYSE: VWO) ETF now has more assets under management than its iShares counterpart. The reason is simple: While both ETFs track the same index, Vanguard delivers the goods at less than half the annual expense ratio of the iShares ETF.
  • Vanguard gives dividend investors two strong choices. Its Vanguard Dividend Appreciation (NYSE: VIG) focuses on stocks that have long histories of raising their dividends over time, which makes it ideal if you care more about building up your future income rather than getting as much cash as you can right now. On the other hand, for those who need top yields today, its Vanguard High Dividend Yield (NYSE: VYM) makes cash-starved fundholders happy with its emphasis on the richest-paying stocks the market has to offer.
  • You can also find sector-specific ETFs on a variety of different industries. From Vanguard Financials (NYSE: VFH) to Vanguard Materials (NYSE: VAW) and Vanguard Utilities (NYSE: VPU), it's easy to get cheap exposure to the sectors you like.

Just as important as offering its own low-cost funds is the impact that Vanguard has had on the rest of the industry. Nowadays, companies like Schwab and Scottrade compete favorably on price against Vanguard. On sector ETFs, the SPDR line of sector ETFs originally charged 0.65%, but most of the sector funds now undercut Vanguard's counterparts with a fee of just 0.20%. Without Vanguard leading the way, it's impossible to know whether the rest of the industry ever would have embraced the low-cost philosophy that Vanguard has turned into a huge reputational advantage.

Ahead of the fleet
Vanguard's ETFs aren't always the biggest in their respective coverage areas. But with commission-free ETF transactions available to customers and a wide array of ETFs covering most of the sectors you'll want for a balanced portfolio, Vanguard demands a place on the short list of ETFs you'll want to consider -- and could end up saving you thousands over the course of your investing career.

In fact, in the Motley Fool's free special report on ETFs, you'll find two ETFs from Vanguard that we think will soar in an economic recovery. Click on the link to see those picks right now.