Not only is Vanguard one of the largest and most widely-known money managers in the world, it's also one of the best. Its focus on broadly diversified fund offerings with razor-thin expense ratios makes it an ideal place for long-term investors to build out their portfolios.
If you're looking to hold on to an exchange-traded fund (ETF) for a generation or more, it makes sense to look at stock funds first. Their capital growth potential exceeds that of bonds over the long term, and a decades-long holding period gives investors the opportunity to ride out the highs and lows.
These are some of the best buy-and-hold ETFs that Vanguard currently offers (with one bond ETF thrown in for good measure).
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Vanguard S&P 500 ETF
No need to make long-term investing any more complicated than it needs to be! The Vanguard S&P 500 ETF (VOO +0.92%) is the largest ETF in the world, with more than $820 billion under its watch. Its focus on the largest and most successful U.S. stocks makes it an ideal cornerstone holding in almost every portfolio.
NYSEMKT: VOO
Key Data Points
Arguments aside about whether or not the index is overconcentrated in tech stocks or too expensive or primed for a correction, making an investment in this ETF and letting the U.S. economic growth engine do its thing over the course of decades is as sensible a wealth creation strategy as you'll find.
Vanguard Total Stock Market ETF
If the Vanguard S&P 500 ETF is the best long-term strategy the company has to offer, this ETF might be a close second. The Vanguard Total Stock Market ETF (VTI +0.95%) follows the same market-cap weighted U.S. equity strategy as the S&P 500 ETF, but it goes way beyond just 500 stocks. It invests in essentially the entire U.S. stock market, covering more than 3,500 stocks.
NYSEMKT: VTI
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The addition of mid caps and small caps to the S&P 500 can be a bit of an acquired taste, but it makes a lot of sense as a long-term strategy. These stocks have historically come with greater return potential than large caps (although you wouldn't know that from the returns of the past several years). And it can diversify away from risk as leadership shifts from one group to the other.
Vanguard Growth ETF
If you're investing for a generation or more, tilting toward more-aggressive growth stocks makes a lot of sense. As we've seen throughout the past couple of years with the AI boom, a lot of the innovation next-gen advances will likely come out of growth companies.
NYSEMKT: VUG
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The Vanguard Growth ETF (VUG +1.14%) invests in companies that have not only grown strongly in the past but are also expected to continue doing so. It narrows down a starting large-cap universe to about 160 names that meet these stringent criteria.
Historically, it has performed in the top quintile of Morningstar's competitive Large Cap Growth category over the past 3-, 5-, 10-, and 15-year periods.
Vanguard Dividend Appreciation ETF
Investing for the long-term doesn't always mean targeting the big growth stocks. It can also be about building a strong portfolio foundation. Targeting big, durable, established dividend-paying stocks is a good way of accomplishing that.
The Vanguard Dividend Appreciation ETF (VIG +0.69%) invests in companies that have raised their annual dividend payments for at least 10 consecutive years. Many of these companies generate consistent cash flows, have healthy balance sheets, and make it a priority to reward shareholders. They may not be as exciting as names like Nvidia or Tesla, but they still do a strong job of delivering long-term returns.
Vanguard Total Bond Market ETF
We shouldn't ignore bonds altogether. Most of investors' focus has been on the stellar returns of the S&P 500, Nasdaq 100, and the "Magnificent Seven." But bonds still provide an important source of income, stability, diversification, and risk management for a long-term portfolio.
The Vanguard Total Bond Market ETF (BND 0.13%) includes thousands of investment-grade U.S. government and corporate bonds. By focusing on the higher-quality end of the spectrum, default risk of these issues is minimal, diversification is high, and interest rates are at a point where you can capture real income from them. The ETF currently offers a yield of about 4.2%.