In the four decades since its founding, the Vanguard Group has grown to be one of the largest investment companies in the world. At the core of that expansion has been Vanguard’s commitment to providing individual investors with low-cost solutions to gaining wealth.
Although other fund companies such as Schwab and Fidelity attempt to compete with Vanguard on fees with selective funds, Vanguard is able to keep its low-cost edge across the fund spectrum based on its unique ownership structure. Unlike other fund companies, which are either corporate-owned or owned by third-party companies, Vanguard is owned by its funds, which, in turn, are owned by their investors. That means the profits generated by the funds’ operations are returned to the investors in the form of lower fees. That makes it very difficult for other companies, which are beholden to their companies’ shareholders, to compete over price.
When exchange-traded funds (ETFs) started to become popular, Vanguard quickly introduced its own suite of ETFs. It has since become the second-largest provider of ETFs in the U.S., after Blackrock. Vanguard’s unique cost structure and the economies of scale it has achieved with the massive amount of assets it has under management have allowed it to offer its ETFs at the lowest cost available in the market.
Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (NYSEARCA: VOO) is one of Vanguard’s lowest-cost ETFs with a 0.04% expense ratio. It is also among the largest with $310.7 billion in assets under management (AUM), according to Vanguard's website. The fund’s objective is to track the performance of the Standard & Poor’s 500 Index. Its top holdings are Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT), and Alphabet Inc. (NASDAQ: GOOGL). As of March 31, 2017, the fund returned 13.26% over the last five years, a slight underperformance compared to the S&P 500's 13.3%. The fund's year-to-date return is 7.26% and its trailing 12-month yield is 1.91%.
Vanguard Total Stock Market ETF
The Vanguard Total Stock Market ETF (NYSEARCA: VTI) is Vanguard’s oldest and largest ETF with $549.6 billion in AUM. For a rock bottom fee of 0.04% the fund covers the entire U.S. stock market. Its top holdings are Apple, Alphabet, and Microsoft. According to Vanguard, as of March 31, 2017, the fund's 10-year return is 7.69%, its five-year return is 13.13%, and its year-to-date return is 7.2%, all slightly below its benchmark the Spliced Total Stock Market Index. VTI's trailing 12-month yield is 1.88%.
Vanguard Total Bond Market ETF
For a 0.05% fee, the Vanguard Total Bond Market ETF (NYSEARCA: BND) offers investors broad exposure to the fixed-income market, including a 42.5% allocation to U.S. Treasury bonds, a 21.4% allocation to government mortgage-backed bonds, and 17.2% to industrials, leaving about 19% for the rest. Its trailing 12-month yield is 2.44%. As of March 31, 2017, the fund returned 2.23% over the last five years, underperforming its benchmark Bloomberg Barclays U.S. Aggregate Bond TR by 0.12%.
Vanguard Growth ETF
The Vanguard Growth ETF (NYSEARCA: VUG) invests in stocks of large-cap companies with high-growth potential. Its $60.2 billion in assets are heavily weighted towards technology stocks, with Apple, Alphabet, Amazon.com Inc. (NASDAQ: AMZN), and Facebook Inc. (NYSE: FB). comprising the top holdings. The fund has returned 9% over the last 10 years, 12.91% over the last five years and 12.02% year to date as of March 31, 2017. Its expense ratio is 0.06%.
Vanguard Large-Cap ETF
The Vanguard Large-Cap ETF (NYSEARCA: VV) invests in stocks representing the largest 85% of the U.S. stock market, which ranges from larger multinational mega-cap companies to smaller mid-cap ones. As of March 31, 2017, its top holdings are Apple, Alphabet, Microsoft, and Amazon. The fund seeks to track the performance of the CRSP U.S. Large Cap Index. Its 10-year return is 7.64% and its five-year return is 13.13%, all slightly below the benchmark. Year to date the return is 7.48%. The fund’s expense ratio is 0.06%.
Vanguard Value ETF
The Vanguard Value ETF (NYSEARCA: VTV) invests in large-cap value stocks in the U.S. across a wide range of industries. It tracks the performance of the CRSP U.S. Large Cap Value Index. As of March 31, 2017, the fund had $55.3 billion in AUM, with the largest holdings being Microsoft, Exxon Mobil Corp. (NYSE: XOM), Johnson & Johnson (NYSE: JNJ), and Berkshire Hathaway Inc. (NYSE: BRK). Over the last 10 years, VTV returned 6.23% and over five years, 13.41%. The fund's expense ratio is 0.06%.
Vanguard Mid-Cap ETF
The Vanguard Mid-Cap ETF (NYSEARCA: VO) has an expense ratio of 0.06%, providing investors with low-cost access to a diversified group of mid-cap companies in the U.S. It tracks the performance of the CRSP U.S. Mid Cap Index. The fund's $83.6 billion AUM is invested in 348 mid-cap stocks, the largest holdings being Equinix Inc. (NASDAQ: EQIX), Electronic Arts Inc. (NASDAQ: EA), and Fiserv Inc. (NASDAQ: FISV). As of March 31, 2017, VO's 10-year return is 7.82% and five-year return is 12.88%. Its trailing 12-month yield is 1.5%
Vanguard Small-Cap ETF
The Vanguard Small-Cap ETF (NYSEARCA: VB) is a high-risk market-cap-weighted fund invested in a diversified group of small companies. It tracks the performance of the CRSP U.S. Small Cap Index. As of March 31, 2017, the fund's largest holdings comprise Diamondback Energy Inc. (NASDAQ: FANG), CDW Corp. (NASDAQ: CDW), and Domino's Pizza Inc. (NYSE: DPZ). It has $74.9 billion in AUM. Over the last 10 years, VB returned 8.21% and over the last five, 12.88%. Its 12-month trailing yield is 1.54%. The fund has an expense ratio of 0.06%.
Vanguard FTSE Developed Markets ETF
With more than $77.7 billion in AUM, the Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA) has become a very popular low-cost way for investors to gain broad exposure to foreign developed markets. The fund is heavily weighted towards large-cap global stocks such as Nestle SA (VTX: NESN), Royal Dutch Shell Plc (NYSE: RDS), Samsung Electronics Co. Ltd. (KRX: 005930), Roche Holding AG (SIX: ROG), Novartis AG (NYSE: NVS), and HSBC Holding Plc (NYSE: HSBC). The fund has returned 6.17% over the last five years and 10.47% year to date, according to data from Vanguard. The fund’s expense ratio is 0.07%.
Vanguard Short-Term Bond ETF
The Vanguard Short-Term Bond ETF (NYSEARCA: BSV) invests in U.S. government, investment-grade corporate and international dollar-denominated bonds. Its benchmark is the Bloomberg Barclays 1-5 Year Government/Credit Float Adjusted Index. In adherence to its investment mandate, the fund is heavily weighted towards short-term U.S. Treasury bonds, with the largest holdings being 1-3 Years (56.3%) and 3-5 Years (42.7%). As of March 31, 2017, BSV returned 1.2% over the last five years and 0.91% year to date. Its expense ratio is 0.07%.