Investing in exchange-traded funds (ETFs) simplifies the process of building a portfolio. Instead of analyzing numerous individual stocks and hoping your selections outperform, ETFs provide immediate diversification across hundreds or even thousands of companies with just one transaction. Fees are minimal—often only a few dollars per $10,000 invested each year—and ETFs help investors avoid common pitfalls, such as selling in panic during downturns or buying into trendy stocks at the wrong moment.
Vanguard stands out among fund providers. Its unique structure means that fund shareholders are the actual owners of the management company, so Vanguard operates for the benefit of its investors rather than outside stakeholders. This approach keeps fees much lower than most rivals. Lower expenses allow more of your money to stay invested, and over time, those savings can significantly boost your overall returns.
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For investors aiming to grow their wealth, three Vanguard ETFs are particularly noteworthy as foundational holdings. Below is a quick summary of each fund and how it can contribute to a diversified investment strategy.
The all-in-one U.S. stock ETF
Vanguard Total Stock Market ETF ( VTI 0.42%) offers exposure to nearly the entire U.S. stock market by holding about 3,500 companies, ranging from the largest corporations to small niche players. This fund reflects the full spectrum of American enterprise—from Nvidia, which leads the AI movement and makes up 6.5% of assets, to smaller banks and manufacturers that, while individually minor, collectively play a significant economic role.
The Vanguard Total Stock Market ETF features an ultra-low 0.03% annual expense ratio, a 1.11% annual yield, and has averaged 14.7% returns per year over the last decade. This impressive track record highlights the benefit of owning the entire market rather than trying to select individual winners.
Additionally, the fund automatically rebalances as companies rise or fall in value, so giants like Microsoft and Apple earn their weight through market performance, not manager decisions. For those wanting a single fund that covers the entire U.S. market, the Vanguard Total Stock Market ETF offers comprehensive exposure at a minimal cost.
The international diversification option
Vanguard Total International Stock ETF ( VXUS 0.86%) fills the gap left by U.S.-centric portfolios. This fund invests in more than 8,600 companies from both developed and emerging markets outside the United States, giving access to regions and sectors where American firms have less presence.
Major holdings include Taiwan Semiconductor Manufacturing at 2.46%—the leading global chip producer—alongside Chinese tech leaders Tencent and Alibaba, top European firms like ASML and SAP, and thousands of mid-sized businesses across Asia, Europe, and Latin America.
The Vanguard Total International Stock ETF charges just 0.05% per year, offers a 2.78% yield that surpasses most U.S.-focused funds, and has delivered an average annual return of 8.4% over the past decade. While international stocks have lagged behind U.S. markets recently, they tend to trade at lower valuations and provide diversification benefits when domestic markets cool off.
With thousands of holdings, the fund avoids overexposure to any single company, and its higher yield can be used for reinvestment or income. For investors whose portfolios are heavily tilted toward U.S. stocks, this ETF adds important international balance.
The tech-focused strategy
Vanguard Information Technology ETF ( VGT 0.77%) zeroes in on the technology sector, the primary engine behind recent market gains. The fund includes around 316 companies in the information technology space—covering software, hardware, semiconductors, and IT services—with Nvidia, Microsoft, and Apple together accounting for roughly 44% of assets. This focus leads to greater volatility but also captures the ongoing transition to digital infrastructure, artificial intelligence, and cloud computing that are shaping the modern economy.
The Vanguard Information Technology ETF has a 0.09% annual fee, a modest 0.4% yield as tech firms typically reinvest profits for growth, and has achieved an outstanding 23.4% average annual return over the last 10 years. This performance underscores the sector’s strength—technology now represents about 30% of the S&P 500, and this ETF provides targeted exposure without diluting it with other industries like utilities or consumer goods.
The main risk is its concentration. When technology stocks decline, this fund tends to fall more sharply than diversified funds. However, for those confident that software and AI will continue to transform industries, this ETF offers direct participation in the companies driving those changes.
