2 top Vanguard ETFs I’d buy and hold in May

May could be a good time to think about where long-term portfolio growth might come from.

For me, that does not always mean trying to pick the next winning share. Sometimes, the simpler move is to buy an exchange-traded fund (ETF) that gives exposure to a broad investment theme and then leave it alone for years.

Here are two Vanguard ETFs I would consider buying and holding this month.

Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE)

The Vanguard FTSE Asia Ex Japan Shares Index ETF is the more adventurous of the two.

It gives investors exposure to Asian share markets outside Japan, including countries such as China, India, Taiwan, South Korea, and others.

I like this ETF because it adds something many Australian portfolios lack.

A lot of local investors already have exposure to Australian banks, miners, and perhaps US technology shares. But Asia is often underrepresented, despite being home to large populations, rising incomes, growing digital economies, and important manufacturing and technology supply chains.

That does not mean the VAE ETF will be smooth. It will not.

Asian markets can be volatile, and investors need to be comfortable with political risk, currency moves, regulation, and uneven economic cycles.

But I think that is also why it can be useful. It gives a portfolio a different source of long-term growth.

Rather than relying only on the US or Australia, the VAE ETF opens the door to businesses exposed to consumption growth, financial development, semiconductors, electric vehicles, online platforms, and regional trade.

For investors with a long time horizon, I think that mix is appealing.

Vanguard S&P 500 US Shares Index ETF (ASX: V500)

The Vanguard S&P 500 US Shares Index ETF is the cleaner and more familiar option.

It gives investors exposure to 500 of the largest listed companies in the United States.

That includes many of the world’s most dominant businesses across technology, healthcare, financials, consumer goods, industrials, and communication services.

What I like about the V500 ETF is that it is a simple way to own a slice of corporate America.

The US market has a strong history of innovation, deep capital markets, and globally competitive companies. That does not guarantee future returns, but I think it gives investors a strong foundation.

It also helps reduce the concentration risk that comes with owning only Australian shares.

The ASX is heavily weighted toward banks and resources. The S&P 500 gives much broader exposure to industries that are not as well represented locally, particularly large global technology and healthcare companies.

Another reason I like the Vanguard S&P 500 US Shares Index ETF is that it can work as a long-term core holding.

Investors do not need to follow every company in the index. The ETF does the job of spreading money across a large group of businesses, while the index naturally adjusts over time as companies rise and fall in importance. That simplicity is valuable.

Foolish takeaway

If I were buying Vanguard ETFs in May, I would consider using the V500 ETF as the core and the VAE ETF as the growth tilt.

One gives exposure to the scale, innovation, and depth of the US market. The other adds access to Asia’s long-term growth story, which I think remains underrepresented in many Australian portfolios.

Both will have weak periods, but for investors willing to buy, hold, and keep adding over time, I think they could bring useful diversification and long-term growth potential to an ASX portfolio.

The post 2 top Vanguard ETFs I’d buy and hold in May appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.