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Vanguard family of ETFsVanguard's real claim to fame is in the world of index funds. Vanguard was the leader in establishing low-cost, index funds that mirrored major market segments, like the S&P 500. This gave investors an easy way to cover large sections of the investment world with one simple transaction, and very low ongoing maintenance and management fees compared to traditional mutual funds. But Vanguard's family of investment vehicles also includes a good variety of ETFs - (what are ETFs? ETF stands for Exchange Traded Fund). ETFs generally target specific market segments like Healthcare or Energy, and invest in leading companies in that sector. However, unlike mutual funds, the holdings of an ETF are transparent, fund managers have little discretion in how or what their money is invested in, expense ratios are very low (like index funds), and ETFs are priced and trade in real time, like stocks. In this guide we will list all the Vanguard ETFs, see what investments options they provide, and find out a little about their return rates and holding, which need to be considered when making investment decisions.
Looking inside the ETFs - What stocks do the Vanguard ETFs hold?When investing in ETFs, you have the advantage of seeing what stocks comprise their holdings, unlike in mutual funds where that information is jealously guarded and released only in historical reporting. A good place to start is at the Vanguard.com/etf site. You'll find all the Vanguard ETFs listed there, and you can click on them for further details, like how many stocks they hold, what the assets of the fund total, how the investments are spread across various sectors (consumer staples, energy, financials, IT, Materials, etc), and what individual stocks make up the fund and in what proportions. At the bottom of each ETF page, you will find a link to view the PCF, or portfolio composition file, which lists which companies make up the holdings of the ETF as of the date listed. Looking into these details are important for a few reasons. For example, if you go just by the name of the fund, you might be misled. The Vanguard High Dividend Yield ETF makes you think it is simply a good income fund, but when you look at its composition, you see its major holdings are Exxon, GE, Citigroup, Bank of America, Procter and Gamble, Johnson and Johnson, Pfizer, Altria, Chevron, AT&T, Wells Fargo, Conoco Phillips, and Coca Cola. True, all these companies pay dividends, but the holdings are pretty similar to buying an S&P 500 fund, and would likely overlap with any other large cap funds you own, duplicating your efforts when you were really looking for income. So do your research before blindly investing in anything - you might be surprised by what you find! One piece of good news is the expense ratios. Take a look at the REIT ETF for example. You'll find an expense ration of just .12% - that's 12 cents on a $100 investment, which is pretty close to zero in our books.
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