Vanguard is one of the leading providers of ASX-listed exchange-traded funds (ETFs). It offers a number of compelling investment products which typically come with low costs.
Aussies can get exposure to ASX shares, international shares, small-cap shares, property shares, bonds and so on.
Vanguard isn't charging investors exorbitant fees. The owners of Vanguard are the investors themselves, it's passing on the profits through lower costs.
Low fees aren't the only thing that matters, but it can be an important element for what the net returns are.
One of the most appealing things about ASX ETFs is that they can be very effective set-and-forget investments. I'm going to talk about two investments from Vanguard that look like top passive picks.
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Vanguard Diversified High Growth Index ETF (ASX: VDHG)
This is an all-in-one fund that aims to give investors broad diversification across a range of shares and bonds.
A large majority (90%) of the fund is invested in growth assets – shares.
Looking at the allocations within the fund, approximately 36% of it is focused on Australian shares, 5% is allocated to emerging market shares, 6.5% to international small companies and 42.5% is allocated to international shares (with some of that hedged for currency).
The other 10% of the fund is invested in 'income' assets, meaning bonds, with 7% of the fund invested in international bonds and 3% invested in Australian bonds.
This fund offers enormous diversification, with exposure to a huge number of businesses across the world.
With this Vanguard ASX ETF invested across so many different funds and asset classes, we can't expect it to generate outsized returns. But it's the sort of investment that could provide decent compounding over the long term.
Since inception in November 2017, it has delivered an average annual return of 9.1%. Despite the extensive diversification work Vanguard did to create this fund, the annual management fee is just 0.27%.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
Investors may not want some of the exposure that the VDHG ETF provides, such as bonds or emerging market allocations. A more specific investment could be appealing instead.
The VGS ETF has returned an average of 12.6% per year over the last five years.
Many of the underlying global businesses within this fund aim to grow with a worldwide customer base. I'm thinking of names like Apple, Microsoft, Nvidia, Alphabet (Google), Meta Platforms, McDonald's, Nestle, and many more. Their global expansion potential means they have long growth runways and can still deliver good returns for shareholders in the years to come.
The VGS ETF portfolio has over 1,360 positions, which provides an excellent level of diversification.
This is one of my favourite ASX ETFs for a buy-and-hold approach because it gives us exposure to most of the global share market.
With an annual management fee of 0.18%, I think this Vanguard ASX ETF provides a compelling investment case for a very reasonable cost.
If I owned it, this is the sort of investment I'd be happy to hold for the rest of my life.
