2 No-Brainer Vanguard ETFs I Would Invest in Right Now

One of the most effective ways to invest in stocks is through exchange-traded funds (ETFs), which allow you to invest in many companies at once. They may not get the attention of individual stocks because they’re not as flashy, but they’re just as lucrative in many cases. They often come with less risk, because you’re not relying on a single company’s performance.

Vanguard, in particular, has a slate of ETFs that make for great long-term investments. If you’re interested in adding a few to your portfolio, consider the following two. They each have a different focus that complements the other well.

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The U.S. economy undoubtedly has its rough patches, but its growth remains one of the long-term growth bets. That’s why I’m a big fan of investing in an S&P 500 ETF like the Vanguard S&P 500 ETF (NYSEMKT: VOO). It’s not directly tied to the U.S. economy, but it tracks the 500 largest American companies on the market, so they tend to move in the same direction over time.

The S&P 500 has gotten tech-heavy in the past few years (tech is now nearly a third of the index), but it still has representation from all 11 major sectors. Below is how VOO is divided:

Information Technology: 33.4%
Financials: 12.9%
Communication Services: 11%
Consumer Discretionary: 10.4%
Health Care: 9.4%
Industrials: 8.6%
Consumer Staples: 5%
Energy: 3.2%
Utilities: 2.2%
Materials: 2%
Real Estate: 1.9%

More important than just having sector representation are the companies represented in these sectors. Many of these companies are industry leaders and have sustained success (which is how they were included in the index to begin with).

It hasn’t been the best start to 2026 for VOO (it’s down close to 1% through March 11), but that doesn’t take away from its long-term potential. Past performance doesn’t guarantee future performance, but the S&P 500 has historically averaged around 10% annual returns over the long haul.

These may not be the outsized gains we’ve seen from individual stocks over the years, but the ETF has proven to be a real way to generate wealth over time. And with VOO’s low 0.03% expense ratio, you can keep more of your gains in your pocket.

While VOO contains only American companies, the Vanguard Total International Stock ETF (NASDAQ: VXUS) focuses solely on international stocks. VXUS has historically underperformed the S&P 500, but it’s a great way to hedge against any rough periods in the U.S. economy and benefit from thriving companies abroad.

International companies are generally divided into two categories based on their market types: Developed and emerging. Developed markets include countries like the U.K., Japan, and France, which have mature economies and financial markets and generally good infrastructure. Emerging markets are countries like China, Brazil, and India, which may not be as stable but are typically seen as headed in that direction.

By investing in VXUS, you gain broad exposure to both market types. It contains nearly 8,700 stocks from the following markets:

Europe: 37.9%
Pacific: 26.4%
Emerging Markets: 26.6%
North America: 7.8%
Middle East: 0.8%
Other: 0.5%

Generally speaking, there’s a risk-reward trade-off that comes with investing in developed versus emerging markets. It’s similar to the trade-off that often comes with investing in large-cap versus small-cap stocks: More stability but lower upside, or more volatility with a higher upside. There are plenty of exceptions, but this is the general rule of thumb, and with VXUS, you get both.

I wouldn’t allocate a large portion of my portfolio to international stocks, but up to 10% is a good threshold for a lot of investors. That’s enough to provide a bit of a safety net, but it doesn’t take away much from the long-term growth typically found in blue chip American companies.

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Stefon Walters has positions in Vanguard S&P 500 ETF and Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and Vanguard Total International Stock ETF. The Motley Fool has a disclosure policy.

2 No-Brainer Vanguard ETFs I Would Invest in Right Now was originally published by The Motley Fool