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Vanguard ETFs For Long-Term Growth And International Diversification

Published 10/26/2020, 09:05 AM

Vanguard exchange-traded funds are among the most popular ETFs. Known for their high intraday liquidity, low expense ratios and transaction costs, these funds can be especially advantageous for long-term portfolios.

As of January 2020, Vanguard had over $6 billion in global assets under management. The company's founder, John Bogle, is widely regarded as a pioneer of index investing, with Warren Buffett saying in a 2016 letter to shareholders that "if a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle."

Today, we'll look at two Vanguard ETFs, one providing exposure to growth stocks and the other to international markets:

1. Vanguard Russell 1000 Growth Index Fund ETF Shares

  • Current Price: $229.06
  • 52-Week Range: $131.88 - $240.69
  • Dividend Yield: 0.76%
  • Expense Ratio: 0.08%

The Vanguard Russell 1000 Growth Index Fund ETF Shares (NASDAQ:VONG) provides exposure to growth shares in US-based large-capitalization (cap) firms.

Vong Weekly Chart

VONG, which has 450 holdings, tracks a range of growth-oriented businesses from the Russell 1000 Growth Index, composed of 1,000 of the largest public firms stateside.

The ten largest stocks in VONG make up over 45% of the fund’s net $8.1 billion assets.

In terms of sector allocation, technology tops the list with 44.6%, followed by consumer discretionary (20%), health care (13.70%), and industrials (12.10%). Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), (NASDAQ:GOOG), and Facebook (NASDAQ:FB) head the list of firms. Over the past decade, these businesses have become household names.

Since the start of the year, the fund is up over 25% and hit an all-time high of $240.69 on Sept 2. Trailing P/E and P/B ratios stand at 38.1 and 11.3, respectively.

In the coming days, many names that make up the top holdings will release quarterly earnings. Therefore, further choppiness and short-term profit-taking are possible. Buy-and-hold investors who can ride out any short-term volatility should keep the fund on their radar.

Those who would like to invest in large-cap growth names could consider buying into the declines in price. The Street typically regards large-cap companies as stable long-term investments, thus, such names are unlikely to get held down by the market for too long.

2. Vanguard FTSE Developed Markets ETF

  • Current Price: $41.75
  • 52-Week Range: $28.46 - $44.67
  • Dividend Yield: 2.37%
  • Expense Ratio: 0.05%

For those looking to invest beyond the US, the Vanguard FTSE Developed Markets Index Fund ETF Shares (NYSE:VEA) provides access to a diverse range of companies, primarily in Europe and the Pacific region as well as Canada.

VEA Weekly Chart

VEA has 3998 holdings and tracks the FTSE Developed All Cap ex USA. The top ten names make up around 10% of net assets of 119 billion.

Switzerland-based consumer goods giant Nestle (OTC:NSRGY), South Korea-based technology conglomerate Samsung Electronics (OTC:SSNLF), Switzerland-headquartered pharma and health care companies Roche (OTC:RHHBY) and Novartis (OTC:NVSEF), Germany-based software business SAP (NYSE:SAP), and Japan-headquartered Toyota Motor (NYSE:TM) lead the names of firms in the fund.

Year-to-date, VEA is down about 5%. Trailing P/E and P/B ratios stand at 18.3 and 1.5. In the short-run, declining gross domestic product across the world could pose a threat to returns. However, those investors who would like to diversify internationally but avoid emerging markets may find value around $37.5.

Below are articles which addressed additional Vanguard ETFs worth considering:

  • Vanguard Consumer Staples Index Fund ETF (NYSE:VDC) — covered here;
  • Vanguard Dividend Appreciation ETF (NYSE:VIG) — covered here;
  • Vanguard FTSE Pacific ETF (NYSE:VPL) — covered here;
  • Vanguard Materials ETF (NYSE:VAW) — covered here;
  • Vanguard Mid-Cap Index Fund ETF (NYSE:VO) — covered here;
  • Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) — covered here;
  • The Vanguard Total International Bond ETF (NASDAQ:BNDX) — covered here;
  • Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) — covered here;
  • Vanguard Total Stock Market ETF (NYSE:VTI) — covered here.

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