In this article, we discuss 10 best Vanguard ETFs to invest in. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Vanguard ETFs to Invest In.
The Vanguard Group is a Pennsylvania-based investment advisor that is the one of the largest global providers of mutual funds and exchange-traded funds, in addition to specializing in brokerage services, asset management, and sub-advisory services. The Vanguard Group manages the long-term investment goals of its clients, helping individuals, institutions, and financial advisors navigate retirement and personal investments.
According to Bloomberg, The Vanguard Group was leading the ETF space that is valued at $6.8 trillion, and Vanguard exchange traded funds have already absorbed approximately $58 billion in 2022, which surpasses 2,817 competing funds combined. BlackRock has been the largest ETF provider since 2003, but with Vanguard’s record $328 billion haul in 2021, it is set to surpass BlackRock as the leading ETF manager over the course of the next two years.
Investing in exchange traded funds allows investors sufficient exposure, especially when they cannot afford individual stocks for a diversified portfolio. Some of the most notable companies that prominent Vanguard ETFs hold in their portfolios include Microsoft Corporation (NASDAQ:MSFT), Pfizer Inc. (NYSE:PFE), and Visa Inc. (NYSE:V).
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Our Methodology
We selected prominent Vanguard ETFs, ensuring to select diversified underlying benchmarks, to provide potential investors with a well rounded outlook of different ETFs. We also made sure that the chosen exchange traded funds held quality stocks that are popular with elite hedge funds.
10. Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI)
Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) is an exchange traded fund that tracks the performance of the CRSP US Total Market Index. Following a passively managed strategy, the ETF invests in large, mid, and small-cap securities that include a diversified mix of growth and value stocks.
Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) holds a total of 4,136 stocks as of January 31, 2022, and the net assets of the fund are $1.3 trillion. With a top ten holdings concentration of 25.1%, the biggest holding of Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) is Apple Inc. (NASDAQ:AAPL), a multinational American tech firm that manufactures and markets smartphones, personal computers, tablets, wearables, and accessories worldwide.
Apple Inc. (NASDAQ:AAPL)’s move to ban the sales of its products in Russia is expected to only push the tech boycott tide even further. The stock gained almost 37% over the last 12 months.
Elite hedge funds are exceedingly bullish on Apple Inc. (NASDAQ:AAPL). According to the fourth quarter database of Insider Monkey, 134 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL), up from 120 funds in the prior quarter. The total stakes held in Q4 amounted to $186 billion. Warren Buffett’s Berkshire Hathaway is the biggest shareholder of the company, with more than 887 million shares worth $157.5 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Pfizer Inc. (NYSE:PFE), and Visa Inc. (NYSE:V), elite investors are piling into Apple Inc. (NASDAQ:AAPL).
Here is what Alger Spectra Fund has to say about Apple Inc. (NASDAQ:AAPL) in its Q4 2021 investor letter:
“Apple is a leading technology provider in telecommunications, computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives tight engagement with consumers and enterprises, fostering the growing purchases of high-margin services like music, apps and Apple Pay. Apple’s quarterly earnings exceeded street estimates on strong margin realization driven by a sales mix of more profitable services. The margin strength was even more impressive given significantly higher freight costs and supply constraints that prevented approximately $6 billion in revenue realization.”
9. Vanguard S&P 500 ETF (NYSE:VOO)
Vanguard S&P 500 ETF (NYSE:VOO) invests in S&P 500 constituents, closely mirroring the returns of the S&P 500 Index, allowing investors exposure to the biggest U.S. companies. Large-cap benchmark ETFs attracted the greatest investor inflows for February. On March 1, Vanguard S&P 500 ETF (NYSE:VOO), with $237.34 billion in assets under management, attracted $15.28 billion of new money, leading all ETFs.
Vanguard S&P 500 ETF (NYSE:VOO) holds 507 stocks in its portfolio, and the total net assets amounted to $816.6 billion. With the top ten holdings comprising 30.1% of the total investments, Microsoft Corporation (NASDAQ:MSFT) is a notable stock held by Vanguard S&P 500 ETF (NYSE:VOO).
Microsoft Corporation (NASDAQ:MSFT) on March 2 announced that it has received clearance from the U.K.’s Competition and Markets Authority over its Nuance Communications, Inc. (NASDAQ:NUAN) deal, marking the last approval the tech giant needed. Microsoft Corporation (NASDAQ:MSFT) shares were higher in premarket, gaining slightly more than 0.5% to $296.73, while Nuance rose to $55.97 after the announcement.
In the fourth quarter of 2021, 262 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), with combined stakes amounting to $75.6 billion, compared to 250 funds in the preceding quarter, holding total stakes worth $65.8 billion. Fisher Asset Management held the leading stake in Microsoft Corporation (NASDAQ:MSFT), with 26.8 million shares worth over $9 billion.
Here is what Alger Spectra Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Class A shares of the Alger Spectra Fund underperformed the Russell 3000 Growth Index during the fourth quarter of 2021. Microsoft Corp. was among the top contributors to performance. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s CEO believes technology spending as a percent of GDP is likely to jump from about 5% today to 10% in a few years and that Microsoft will continue to take market share Microsoft Corporation (NASDAQ:MSFT)’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Microsoft Corporation (NASDAQ:MSFT) reported that Azure grew 50% in the past quarter. This high unit volume growth is a primary driver of the company’s higher share price, but strong operating execution has enabled margin expansion that has also helped to increase forward earnings estimates. We believe Microsoft Corporation (NASDAQ:MSFT)’s subscription-based software offerings and cloud computing services have a durable growth profile because they enhance customers’ growth initiatives and help them to diminish costs. Additionally, investors appreciate Microsoft’s strong free cash flow generation and its return of cash to shareholders in the form of dividends and share repurchases.”
8. Vanguard Russell 2000 Index Fund ETF Shares (NASDAQ:VTWO)
Vanguard Russell 2000 Index Fund ETF Shares (NASDAQ:VTWO) mirrors the performance of the Russell 2000 Index, which consists of small-cap U.S. companies. As of December 31, 2021, Vanguard Russell 2000 Index Fund ETF Shares (NASDAQ:VTWO)’s 1-year returns came in at 14.81%, compared to the Russell 2000 Index, which returned 14.82% over the same period.
On December 15, Vanguard Russell 2000 Index Fund ETF Shares (NASDAQ:VTWO) declared a quarterly distribution of $0.4745, which was paid on December 21. As of January 31, Vanguard Russell 2000 Index Fund ETF Shares (NASDAQ:VTWO) holds 2081 stocks in its portfolio, with total net assets amounting to $6.9 billion.
A major underlying holding of the ETF is Ovintiv Inc. (NYSE:OVV), a Colorado-based company that explores and markets natural gas, oil, and natural gas liquids, with the company’s primary reserves based in Texas, Oklahoma, British Columbia, and Alberta. Ovintiv Inc. (NYSE:OVV)’s revenue for the fourth quarter jumped 118.52% year-over-year to $3.34 billion, topping market consensus by $1.38 billion.
Among the hedge funds tracked by Insider Monkey, 44 hedge funds held long positions in Ovintiv Inc. (NYSE:OVV) at the end of December 2021, owning combined stakes of more than $1 billion. Marshall Wace LLP held the biggest position in the company, with shares worth $132.75 million.
Here is what Miller Value Partners Opportunity Equity has to say about Ovintiv Inc. (NYSE:OVV) in its Q4 2021 investor letter:
“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.
We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.
One new name that illustrates the potential we see is Ovintiv (OVV), an oil and gas producer. We’ve seen a huge shift in the industry away from growth towards returns on capital, cash generation, and capacity discipline. OVV exemplifies the change.
OVV’s new CEO Brendan McCracken says: “We are at the forefront of driving innovation to produce oil and gas from shale both profitably and sustainably. We will generate superior returns and free cash flow by continuously improving capital efficiency and expanding margins while driving down emissions. We will deliver that value to our shareholders through disciplined capital allocation.”
Based on crude at $65 (well below the current $83.82 as of 1/14/22), the company guides to free cash flow generation of $11B over the next 5 years and $21B in the next 10 years. The company’s market cap is currently $10B and its enterprise value is $16B. It’s returning a significant portion of the capital to shareholders. If crude averages $70 in 2022, the company will return $700M to shareholders (in addition to paying down a significant amount of debt), which implies a yield of 7% at the current $39.53 price. In other words, there’s a good shot the company will return nearly its entire market cap to shareholders over the next 5 years.”
7. Vanguard Total World Stock Index Fund ETF Shares (NYSE:VT)
Vanguard Total World Stock Index Fund ETF Shares (NYSE:VT) is an exchange traded fund that invests in foreign and U.S. stocks, with a primary focus on emerging markets, Europe, Pacific, the Middle East, and North America. Vanguard Total World Stock Index Fund ETF Shares (NYSE:VT) declared on December 20 a quarterly distribution of $0.7850, which was paid to shareholders on December 23.
Vanguard Total World Stock Index Fund ETF Shares (NYSE:VT) tracks the performance of the FTSE Global All Cap Index, and the ETF has high potential for growth, but also exposes investors to high risk. As of January 31, 2022, the ETF holds 9,350 stocks in its portfolio, and the net assets equal $34.1 billion.
A major underlying security in Vanguard Total World Stock Index Fund ETF Shares (NYSE:VT)’s portfolio is Alphabet Inc. (NASDAQ:GOOG). The tech company agreed to buy cybersecurity firm Mandiant, Inc. (NASDAQ:MNDT) on March 8 for $23 per share in cash. The total value of the all-cash deal is $5.4 billion, and Alphabet Inc. (NASDAQ:GOOG) was competing with Microsoft Corporation (NASDAQ:MSFT) for the cybersecurity firm, though it reportedly walked away from the deal.
TCI Fund Management is the largest shareholder of Alphabet Inc. (NASDAQ:GOOG), with almost 3 million shares worth $8.5 billion. Overall, the fourth quarter database of Insider Monkey suggested that 158 hedge funds were long Alphabet Inc. (NASDAQ:GOOG), up from 156 funds in the quarter earlier.
Here is what Harding Loevner Global Equity Fund has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2021 investor letter:
“In a quarter that saw Alphabet’s Al-driven protein modeler win Science magazine’s “Breakthrough of the Year,” we also focused on a pair of companies putting somewhat less cutting-edge healthcare technology to lucrative use.
The one region where the style headwinds didn’t slow us at all was the US, where the portfolio’s holdings outperformed a very strong market. Good relative performance within the US was amplified by our hefty allocation there, which for most of the year remained close to the 65% ceiling of our risk guidelines, despite our trimming exposure to several US holdings as their valuations climbed. The positive contributors included Google parent Alphabet, up strongly on the year, thanks to a solid recovery in its core advertising business and ongoing progress on its cloud computing offerings.”
6. Vanguard Mid-Cap Index Fund ETF Shares (NYSE:VO)
Vanguard Mid-Cap Index Fund ETF Shares (NYSE:VO) is an exchange traded fund that mirrors the performance of the CRSP US Mid Cap Index, a benchmark that measures the investment return of mid-cap stocks, following a passively managed, full-replication approach. On December 23, Vanguard Mid-Cap Index Fund ETF Shares (NYSE:VO) declared a quarterly distribution of $0.9203, which was paid on December 30.
As of January 31, the ETF owns 371 stocks in its portfolio, with total net assets amounting to $155.7 billion. The largest holding in the portfolio of Vanguard Mid-Cap Index Fund ETF Shares (NYSE:VO) is Pioneer Natural Resources Company (NYSE:PXD), a Texas-based company that operates as an independent oil and gas company in the United States, producing oil, natural gas liquids, and gas.
Piper Sandler analyst Mark Lear raised the price target on Pioneer Natural Resources Company (NYSE:PXD) to $274 from $256 and kept an Overweight rating on the shares. According to the analyst, the exploration and production group is “passing the initial test on promised capital discipline” through price cycles and is broadly not accelerating activity levels in the current price environment.
Elite hedge funds hold large stakes in Pioneer Natural Resources Company (NYSE:PXD). In Q4 2021, 43 hedge funds were bullish on the stock, with collective stakes amounting to over $1 billion. Adage Capital Management held the biggest stake in the company, with 1.6 million shares worth $298.2 million.
Just like Microsoft Corporation (NASDAQ:MSFT), Pfizer Inc. (NYSE:PFE), and Visa Inc. (NYSE:V), Pioneer Natural Resources Company (NYSE:PXD) is a notable pick of institutional investors heading into 2022.
Here is what ClearBridge Investments Dividend Strategy has to say about Pioneer Natural Resources Company (NYSE:PXD) in its Q3 2021 investor letter:
“Over the last year we have also added a position in Pioneer Natural Resources, a best-in-class producer in the Permian Basin. We added Pioneer as we anticipated rising commodity prices and sought more direct leverage to that trend. Our overweight to energy has benefited our performance this year, in particular through the first half of the year, and we believe the sector, still less than 3% of the S&P 500, remains underinvested and attractive going forward.”
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Disclosure: None.10 Best Vanguard ETFs to Invest Inis originally published on Insider Monkey.
