I love the Vanguard brand and investing in Vanguard products, including the popular ASX exchange-traded funds (ETFs).
Unlike the vast majority of its competitors, Vanguard is a not-for-profit institution founded by the late, great Jack Bogle in the 1970s to prioritise the wealth of its clients.
We can see this ethos continue today, with Vanguard amongst the most widely trusted ETF providers on the ASX. Vanguard's ETFs and index funds also tend to be amongst the cheapest on offer, thanks to the lack of profit prioritisation.
I myself own two Vanguard products. I intend to hold these investments indefinitely and add to them whenever I can. Let me explain why I chose these funds.
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Why I buy and own these two Vanguard ETFs
First, we have the Vanguard Australian Shares Index ETF (ASX: VAS). VAS is the most popular index fund and ETF on the ASX and by a mile.
It is a simple index fund that tracks the S&P/ASX 300 Index (ASX: XKO), which reflects the performance of the largest 300 stocks in the Australian share market.
I invest in this Vanguard ASX ETF for two primary reasons. The first is that VAS offers wonderful diversification. Holding 300 individual stocks spreads out risk and offers returns from a wide variety of different, high-quality stocks.
I enjoy investing in a fund that contains everything from Telstra Group Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC) to AGL Energy Ltd (ASX: AGL) and Qantas Airways Ltd (ASX: QAN). VAS has also historically delivered a healthy mix of capital growth and dividend income.
The second reason I own VAS units is for insurance of sorts. In addition to buying ASX ETFs, I also invest in individual stocks. I'd like to think that these individual stock picks will outperform the Vanguard Australian Shares ETF over my lifetime. However, studies show that this is a difficult task to achieve. As such, I concurrently invest in this index fund in case my other stock picks don't deliver.
But I also own another Vanguard ETF that compliments VAS quite nicely. It's the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO).
Covering all bases with ASX ETFs
As the name implies, this index fund also covers ASX shares, but only those on the smaller end of the market.
The VAS ETF is heavily tilted towards the largest companies on the ASX – predominantly the banks and miners. This can be great for dividends but leaves an investor relatively underexposed to many of the ASX's up-and-comers.
That's where VSO comes in. It holds around 170 smaller stocks that offer a boatload of Australian diversification that I believe compliments VAS nicely. With these two Vanguard ASX ETFs, I think I have a perfectly balanced exposure to the best that our markets have to offer.
Foolish takeaway
To be fair, these two Vanguard ETFs are not the only funds that I own. Other providers offer products and markets that Vanguard doesn't.
That's why, in addition to VAS and VSO, you'll find the VanEck Morningstar Wide Moat ETF (ASX: MOAT) in my portfolio, as well as the iShares Global Consumer Staples ETF (ASX: IXI) and the BetaShares Nasdaq 100 Currency Hedged ETF (ASX: HNDQ).
Even so, Vanguard will always be my favourite ASX ETF provider.
