Those who are familiar with Vanguard’s ETF lineup are likely well-acquainted with the Vanguard S&P 500 ETF (VOO). After all, this fund — which provides low-cost exposure to the S&P 500 — is currently the largest fund in terms of AUM.
Key Takeaways:
- The Vanguard S&P 500 ETF (VOO) has attracted compelling inflows for a good reason, but this fund alone is not enough to build a well-diversified portfolio.
- Within its ETF library, Vanguard has plenty of tools available to foster a balanced approach. The Vanguard Extended Market ETF (VXF) can help investors access U.S. midcap and small-cap companies, and the Vanguard Total International Stock ETF (VXUS) provides international exposure.
- These funds, when all paired together, can provide a low-cost way to access a variety of different markets within one portfolio.
Vanguard has plenty of other ETFs within its lineup that investors should be well-aware of. After all, the key to long-term success on the market is often a balanced portfolio, and one cannot solely win with S&P 500 exposure alone.
Fortunately, Vanguard has well over 100 ETFs listed within the United States. Many of these funds can help investors construct portfolios that blend VOO’s S&P 500 exposure with other key areas of the domestic and global markets.
Looking Outside the S&P 500
For instance, investors may be looking to foster exposure to the small-and midcap sections of the U.S. market. The Vanguard Extended Market ETF (VXF) could be very useful in this regard.
Another low-cost fund from Vanguard, VXF seeks to provide similar performance to that of the S&P Completion Index.
This index tracks U.S. equities that are not included within the S&P 500. As such, VXF offers an interesting sector blend — mixing midcap and small-cap exposure with investment in large-caps that operate outside the S&P 500. VXF’s approach naturally provides an easy way for investors to diversify their equity exposure outside of VOO through a one-ticker solution.
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Blending International Exposure With VXUS
Of course, diversification is not limited to the domestic markets. Right now, many investors are looking to build more exposure to international markets, both to diversify and capitalize on potential opportunities.
Pairing VOO with something like the Vanguard Total International Stock ETF (VXUS) can help portfolios gain access to both domestic and international markets. VXUS tracks the performance of the FTSE Global All Cap ex US Index. This index looks at stocks from markets from a variety of different regions outside the United States.
Blending VXUS with VOO can provide meaningful exposure to compelling companies across the globe. When adding VXF into the picture for a broader picture of the U.S. market, investors can gain even more diversified access.
Low fees make this approach even more appealing—none of these funds have expense ratios larger than five basis points. Moments like this highlight the versatility of the ETF wrapper, and how investors can mix and match funds to create a well-diversified portfolio.
Originally posted on ETF Trends
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