Categories: Exchange Traded Funds (ETFs)U.S. Investing

Streamlined Investing with Vanguard’s Exchange-Traded Funds

Exchange-traded funds (ETF) are great investment vehicles compared to the traditional mutual funds for three key reasons. The reasons are: transparency in timely reporting of the securities they hold; ease of buying and selling throughout a trading day just as with a stock, rather than reconciled at 6 or 7 p.m. like a mutual fund; and cost-effectiveness, since management fees for ETFs are typically much lower than for mutual funds.

The ETF provider which has done the most to emphasize this third advantage of cost-effectiveness is Vanguard.

Vanguard generally claims lower ETF expense ratios than its peers, aided by tapping tax-management strategies that normally are only used by conventional index funds. Additionally, Vanguard brokers will trade Vanguard ETFs commission-free.

Vanguard has a portfolio of 52 ETFs. The selection includes geographically focused ETFs, such as the FTSE Developed Markets ETF (VEA); sector ETFs, such as the Consumer Discretionary ETF (VCR); and niche investment ETFs, such as the Vanguard High Dividend Yield Index ETF (VYM), shown in the chart below.

Along with the rest of the stock market, VYM has experienced a correction during the first six weeks of 2014. However, its yield is an attractive 3.14%. The fund’s recent pullback may offer an attractive buying opportunity, if you think the fund can build upon its return of 30.27% last year.

In addition, your investments are only worth what you make after the fund management firm deducts for its fees. To that end, Vanguard lets you keep more of what you earn for yourself.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed them, read my ETF Talks from previous weeks about ETF providers iShares and State Street.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/