Is this the best Vanguard ETF money can buy?

There are many Vanguard exchange-traded funds (ETFs) available on the ASX.

Some are designed for broad global exposure. Others focus on Australia, bonds, high growth portfolios, or diversified all-in-one investing.

But if I had to choose one Vanguard ETF for long-term growth, I think there is a very strong candidate.

The Vanguard S&P 500 US Shares Index ETF (ASX: V500) could be the best Vanguard ETF money can buy.

Why this Vanguard ETF stands out

The appeal of the V500 ETF is its simplicity.

It gives investors exposure to the S&P 500 index, which is made up of 500 of the largest listed companies in the United States. That means investors can buy one ASX ETF and gain access to a large group of businesses across different industries.

I think that is a powerful starting point.

The S&P 500 has delivered an average annual return of around 10% over the very long term. There is no guarantee that future returns will match the past, and there will always be difficult periods along the way.

But I believe the index can continue to perform well over the long term because of the quality of the companies inside it.

The US market has an unusually deep collection of global leaders. Many of these businesses do not only serve American customers. They sell products, software, services, medicines, food, payments, entertainment, and infrastructure across the world.

That gives the V500 ETF a much broader feel than a simple US-only investment.

A collection of world-class companies

The technology exposure is the part many investors think about first.

Through V500, investors gain exposure to companies such as Microsoft, Apple, NVIDIA, and Alphabet. These businesses are central to cloud computing, artificial intelligence, smartphones, software, digital advertising, and data infrastructure.

But the ETF is not only a technology fund.

It also owns major banks such as JPMorgan Chase & Co and Bank of America, which gives investors exposure to the US financial system. These are large institutions tied to lending, deposits, payments, markets, and corporate activity.

There is also exposure to resources and materials businesses, including Freeport-McMoRan and Newmont Corp. These companies connect the index to copper, gold, and the raw materials needed across parts of the global economy.

On the consumer side, this Vanguard ETF owns businesses such as Amazon.com, Walmart, and Costco. These are very different retailers, but each has built scale, customer loyalty, and deep logistics capability.

The food and beverage exposure is also useful. Companies such as Coca-Cola, Starbucks, and McDonald’s show how the index includes businesses with global brands and repeat customer demand.

Healthcare adds another layer. Eli Lilly and Co, Johnson & Johnson, and UnitedHealth give the V500 ETF exposure to medicines, medical products, healthcare services, and long-term demand from ageing populations.

That mix is why I rate the ETF highly.

Low cost and easy to own

Another reason I like V500 is the cost. The ETF has a very low management fee of 0.07% per annum. Over long periods, low fees can make a meaningful difference because more of the return stays with investors.

I also like that it is easy to understand. Investors are not relying on one fund manager picking stocks. They are buying broad exposure to many of the largest companies in the US market.

There are risks. The US market can become expensive, the index is heavily influenced by large technology companies, and currency movements can affect returns for Australian investors.

But I think those risks are worth accepting for investors who want long-term exposure to global corporate leaders.

Foolish takeaway

I would not say V500 is the perfect ETF for every investor.

Some people may prefer an all-in-one fund. Others may want more Australian exposure, more defensive assets, or a wider global spread.

But for investors seeking simple, low-cost exposure to many of the world’s most important businesses, I think this Vanguard ETF has a very strong claim.

The post Is this the best Vanguard ETF money can buy? appeared first on The Motley Fool Australia.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. 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 positions in and has recommended Alphabet, Amazon, Apple, Costco Wholesale, Eli Lilly, JPMorgan Chase, Microsoft, Nvidia, Starbucks, and Walmart. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and UnitedHealth Group and has recommended the following options: long January 2028 $320 calls on McDonald’s and short January 2028 $340 calls on McDonald’s. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Microsoft, Nvidia, and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.