Best Vanguard ETF UK – Compare Top ETFs 2021

If you’re thinking about investing in an exchange traded fund (ETF) – Vanguard is a major player in this space. The provider covers dozens of markets and investment objectives – so there’s something to suit most investors.

This includes everything from index funds, specific share markets like dividend stocks, and even direct access to the emerging economies.

In this guide, we review the best Best Vanguard ETF Funds 2021. We also show you how you can invest in your chosen Vanguard fund with a commission-free FCA broker in less than 10 minutes!

Best Vanguard ETF UK 2021 List

Strapped for time and looking for the best Vanguard ETF UK right now? If so, below you will find out which funds made the cut. For a full analysis of each Vanguard ETF – scroll down.

  1. Vanguard S&P 500 ETF – Overall Best Vanguard ETF UK – Invest Now
  2. Vanguard Small-Cap Growth ETF – Best Vanguard ETF UK for Investing in Small Companies – Invest Now
  3. Vanguard Total Bond Market ETF – Best Vanguard ETF UK for Bond Investments – Invest Now
  4. Vanguard FTSE All-World ex-US ETF – Best Vanguard ETF UK for Global Stocks
  5. Vanguard Short-Term Bond ETF – Best Vanguard UK ETF for Hedging

Best Vanguard ETFs UK Reviewed

Vanguard offers 74 funds to those based in the UK. This covers a variety of ETF markets – such as dividend stocks, fixed-income, and UK equity index funds.

As always, each Vanguard ETF will come with varying risks and potential rewards – so always do your homework before taking the plunge.

To help clear the mist, below you will find the best ETFs that in the Vanguard ETF market.

1. Vanguard S&P 500 ETF – Overall Best Vanguard ETF UK

Make no mistake about it – if you’re looking to diversify into the US stock markets – this is the best Vanguard ETF UK available. As the name suggests, the ETF tracks the S&P 500 like-for-like. If you’re unfamiliar with the S&P 500 – it is the largest and most liquid stock market index in the world.

Put simply, this index fund will track the performance of the largest 500 companies from the NYSE and NASDAQ. To give you an idea of some of the companies you will be gaining exposure to – think along the lines of Amazon, Paypal, Visa, Johnson & Johnson, Apple, Facebook, and Disney. In other words, the biggest and most recognized brands globally.

Vanguard S&P 500 ETF (VOO)Like all index funds, this Vanguard ETF will weigh its portfolio to mirror the S&P 500. For example, at the time of writing, Amazon and Tesla have a weighted of 4.4% and 1.90%. This means that if you invested £5,000 into Vanguard S&P 500 ETF – you would indirectly own £220 worth of Amazon stocks and £95 in Tesla stocks.

The remaining £4,685 will be allocated across the other 498 companies that form the Vanguard S&P 500 ETF – at a proportionate rate. Crucially, this means that through a single investment into the Vanguard fund – you will buy shares in 500 top-rated US-listed firms. In terms of performance, this Vanguard fund has generated exceptional returns – fully in-line with the index itself.

Vanguard S&P 500 ETF (VOO)

For example, over the past 10 years, the Vanguard ETF has seen average annualized returns of 13.39%. During the same period, the index benchmark grew by 13.43% per year – which is virtually like-for-like. If you’re wondering how to make money from this top-rated Vanguard S&P 500 ETF, this comes in two forms.

Firstly, when the value of the 500 companies within the index collectively rises – as will the value for your investment. After all, Vanguard actually holds the 500 stocks. Secondly, hundreds of companies within the S&P 500 pay dividends, too. As an investor in the ETF, you will be entitled to your share.

When it comes to fees – it doesn’t get much better with this Vanguard ETF. Per year – the provider charges an expense ratio of just 0.03%. That’s just £3 for every £10,000 invested. Best of all – when buying this ETF through FCA broker eToro – you won’t pay any dealing fees or commissions when you enter and exit the market.

Your capital is at risk.

 

2. Vanguard Small-Cap Growth ETF – Best Vanguard ETF UK for Investing in Small Companies

Vanguard doesn’t just give you access to large-scale index funds like the S&P 500 and FTSE 100. On the contrary, the fund provider also allows you to indirectly invest in small-cap companies that are still growing. One of the best  Vanguard ETFs UK in this respect, is that of its Small-Cap Growth fund.

As the name implies, you will be investing in companies with a small market capitalization. These are all listed in the US – so again, this ETF is great for those of you that wish to gain exposure to the American stock markets. To give you an idea of some of the stocks held by this Vanguard ETF, this includes the following top-10 holdings:

  • Plug Power Inc.(PLUG)
  • Enphase Energy Inc.(ENPH)
  • MongoDB Inc.(MDB)
  • Catalent Inc.(CTLT)
  • Zendesk Inc.(ZEN)
  • Horizon Therapeutics plc(HZNP)
  • Penn National Gaming Inc.(PENN)
  • Monolithic Power Systems Inc.(MPWR)
  • Avantor Inc.(AVTR)
  • PTC Inc.(PTC)

Now, you might not have heard of all of the above companies – as many are still up and coming in their respective sector or industry. In fact, the company with the largest valuation – Plug Power, has a market capitalization of less than $500 million USD. This shouldn’t, however, put you off – especially when you look at the fund’s returns over the past decade.

Vanguard Small-Cap Growth Index Fund ETF

For example, in the 10 years prior to writing this page, the Vanguard Small-Cap Growth ETF was priced at just over $80 per share on the NYSE Acra. Fast forward to early 2021 and the same ETF has since surpassed $304. This equates to 10-year returns of over 280%.

In terms of fees, this particular fund is ever-so-slightly more expensive than the previously discussed Vanguard S&P 500 ETF at 0.07% per year. With that said, this still amounts to just £7 for every £10,000 invested. This offers great value when you consider you are getting access to hundreds of small-cap American shares!

Your capital is at risk.

 

3. Vanguard Total Bond Market ETF – Best Vanguard ETF UK for Bond Investments

Bonds are often underappreciated with newbie investors in the UK – perhaps because of the thrill of not picking and choosing the next big stock. But, bonds allow you to earn a predictable stream of income – making them a great alternative to the volatile nature of shares. With that said, buying bonds in the UK as a retail client can be difficult.

This is because the minimum lot size of bonds is often very high. The good news is that the Vanguard Total Bond Market ETF allows you to invest in this marketplace with ease. In fact, if opting to complete the purchase with low cost broker eToro – the minimum investment is just $50.

Vanguard Total Bond Market ETF (BND)

Most importantly, you won’t be investing in a small selection of bonds. On the contrary, this top-rated Vanguard ETF gives you access to over 10,000 bond instruments. This covers a wide variety of bond types – ensuring that you are well diversified. For example, 42.4% of the portfolio is held in Treasuries and T-Bills. These are as good as risk-free.

You then have 20.8% in other government bonds and 18% from the industrial sectors. Other sectors include finance and banking, mortgage-backed securities, and foreign-owned bonds. In terms of performance, this is another top-rated Vanguard ETF that has generated superb returns over the past decade.

Although slightly more modest than the other ETFs we have covered, the fund has averaged annualized returns of 3.51% over a 10-year period. You will also benefit from regular bond coupon payments in the form of dividends. But, unlike most other Vanguard funds – which make distributions quarterly, this is paid every month.

Your capital is at risk.

 

4. Vanguard FTSE All-World ex-US ETF – Best Vanguard ETF UK for Global Stocks

If you’re looking to build a super-diversified portfolio of stocks – but you don’t want to gain exposure to the US markets – this ETF is ideal for you. In a nutshell, the Vanguard FTSE All-World ex-US ETF will give you indirect access to over 3,400 stocks from every corner of the world. This includes regions in Europe, Asia, Australia, and heaps of emerging markets.

For example, 16% and 12% of your portfolio will be held in stocks listed in Japan and China, respectively. While 9% is held in UK stocks, 6% and 5% are allocated to France and Germany. There is also an allocation of funds into companies listed in India, Canada, Taiwan, South Korea, Brazil, Thailand, South Africa, and more.

Vanguard FTSE All-World ex-US ETF (VEU)

To give you an idea of some of the stocks you’ll be buying – this includes Taiwan Semiconductor Manufacturing, Samsung, ASML Holding, Alibaba, Tencent, and Roche Holding. When it comes to performance, this Vanguard ETF has made gains of over 26% in the 12 months prior to writing this page.

Looking further afield, the ETF has managed average annualized gains of over 5% per year. Although you will be gaining access to otherwise difficult-to-reach markets – the annual expense ratio on the Vanguard FTSE All-World ex-US ETF is just 0.08% – which amounts to £8 per for £10,000 invested.

Your capital is at risk.

 

5. Vanguard Short-Term Bond ETF – Best Vanguard ETF UK for Hedging

Let’s be clear – this Vanguard ETF is not an investment aimed at outperforming the market. On the contrary, the Vanguard Short-Term Bond ETF is aimed at hedging against the wider stock markets. That is to say, during times of economic uncertainties, this ETF allows you to hedge your capital into a super low-risk marketplace.

With a Vanguard risk rating of 1/5 (lowest risk possible), this ETF consists of short-term bonds of the highest quality. Think along the lines of US government bonds, high-grade corporate bonds, dollar-backed bonds. As short-term bonds, none of the instruments in this ETF have a maturity date of more than 1-5 years.

Vanguard Short-Term Bond ETF (BSV)

To give you an idea of just how stable this Vanguard ETF is, it was priced at $79.98 in the five years prior to writing, Today, the ETF is worth just over $82. That’s a five-year upswing of just 2.5%. Of course, this Vanguard ETF isn’t a long-term investment – so it’s best to allocate your funds elsewhere when the time is right.

Your capital is at risk.

 

How to Choose the Best Vanguard ETFs to Invest in

As we briefly mentioned earlier, there are over 74 Vanguard funds offered to UK investors. This gives you ample choice. However, you can’t invest in all of them – so you need to do some homework.

To help clear the mist – below we explain what to consider when choosing the best Vanguard ETF UK for you.

Fund Objective

Perhaps the most important thing to consider in your search for the best Vanguard ETF UK is the fund objective. This is essentially what the ETF is looking to achieve. As you likely know, ETFs are different from mutual funds because they are only tasked with ‘tracking’ a specific asset, or group of assets.

Vanguard FTSE All-World ex-US ETF (VEU)

Mutual funds, however, will look to outperform the respective market. Nevertheless, you can head over to the Vanguard website to read what the objective of the fund is. As an example, the Vanguard S&P 500 ETF is tasked with tracking the index of the same name. This means that it will try to replicate the S&P 500 as closely as possible by buying all 500 shares at the correct weight.

Asset Classes

Once you have an understanding of what the fund objective is, it is then time to think about which assets you want to gain exposure to. In most cases, this will be a choice between stocks, bonds, or a combination of the two.

Markets

One of the best things about Vanguard ETFs is that you will have access to a broad range of markets. For example, if you want to invest in the UK stock market – you might consider a Vanguard ETF that tracks the FTSE 100. There is also a Vanguard ETF that includes stocks from and therefore allows you to invest in the FTSE 250 and AIM.

If it’s American stocks that you are interested in, there are dozens of potential Vanguard ETFs to choose from. As we covered earlier, the Vanguard Small-Cap Growth ETF tracks hundreds of US-listed companies with a valuation of less than $500 million.

Vanguard FTSE All-World ex-US ETF (VEU)

If you have a slightly higher appetite for risk and wish to access the merging markets, Vanguard also has you covered. This includes the Vanguard FTSE All-World ex-US ETF, which covers over 3,400 stocks from dozens of fast-growing economies. All in all, have a think about which countries and regions you want to inject money into.

Past Performance

It’s really easy to get an idea of how much money you might be able to make by looking at the past performance of the respective Vanguard ETF. Sure, past performance can never guarantee future returns. But, it at the very least gives you an indication of what might be possible.

What we really like about Vanguard is that it breaks down its past performance statistics by the average annualized return. This takes the total returns over a set period and then divided it down by the number of years. For example, the Vanguard S&P 500 ETF made gains of 90% over 10 years, meaning that the average annualized return is 13.39%

Risk

In choosing the best Vanguard ETF UK for you and your financial goals – you must also consider how much risk is involved. For example, it goes without saying that the Vanguard Short-Term Bond ETF offers the least amount of risk in terms of what we have discussed today.

This is because you are investing in a fund that focuses on high-grade corporate bonds and US Treasuries. In turn, Vanguard gives the fund a risk rating of 1/5.

Vanguard FTSE All-World ex-US ETF (VEU)

At the other end of the spectrum, the Vanguard FTSE All-World ex-US ETF carries a risk rating of 5/5. This is because the fund holds hundreds of stocks from the emerging markets – including regions such as Thailand, South Africa, Taiwan, and Brazil. In other words, although the Vanguard FTSE All-World ex-US ETF has performed really well since its inception – the risks are high.

Expense Ratio and Brokerage Fees

When searching for the best Vanguard ETF UK – Don’t forget to check what fees are applicable. After all, you might need to pay a fee of three fronts.

This includes:

  • Expense Ratio: This is the fee charged by Vanguard fund managers. The expense ratio covers all related costs involved with running the ETF and it is passed on to you as the investor. The good news is that the best Vanguard ETFs UK cost less than 0.1% per year. In the case of the Vanguard S&P 500 ETF – this comes with an expense ratio of 0.03% – or 30p for every £1,000 invested!
  • Dealing Fee: Many stock brokers in the UK will charge a dealing fee every time you buy and sell an ETF. This is usually a flat fee that remains the same irrespective of how much you invest.
  • Annual Fee: On top of a dealing commission, many UK brokers and stocks apps will also charge you an annual platform fee when you hold ETFs. For example, Hargreaves Lansdown will charge you 0.45% per year on fund investments – which is significantly more than Vanguard itself charges.

Best Vanguard ETF UK Investment Platforms 2021

So now that you have chosen the best Vanguard ETF UK for your needs – we are now going to talk brokers. This is because although Vanguard allows UK retail clients to invest directly through its website, there is a major stumbling block – the minimum investment per fund is £500.

Not only is this somewhat high – but it prevents you from being able to diversify with ease. Plus, some Vanguard ETFs are not available on the UK-version of the platform, which is where a trusted ETF broker can help.

With this in mind, below we review a small selection of trading platforms that allow you to access the best Vanguard ETFs UK.

1. eToro – Invest in Vanguard Funds with 0% Commission

eToro is not only one of the most popular brokerage sites in the UK – but globally. With more than 20 million clients under its belt – investors at eToro are treated to a 100% commission-free environment. This means that you can buy and sell the best Vanguard ETFs UK without paying any dealing charges.

Instead, as there are no platform fees at eToro – the only applicable charge is that of the Vanguard fund expense ratio. As we covered earlier, this starts from just 0.03% per year. In terms of what passive funds the platform offers, all of the Vanguard ETFs we have discussed on this page can be purchased at eToro. And best of all – the broker allows you to invest a minimum of just $50 (about £35 GBP).

etoro vanguard funds

This is significantly lower than the £500 minimum required when you invest directly on the Vanguard website. We should also note that eToro is home to thousands of other financial markets. This includes over 2,400 shares from 17 stock exchanges, 18 cryptocurrencies, and hundreds of other ETFs. Once again, all of these financial instruments can be bought and sold commission-free. As an added bonus, eToro even waivers the 0.5% stamp duty tax that you normally pay on UK-listed stocks.

In terms of the fundamentals, eToro is regulated by the Financial Conduct Authority (FCA). Your investment capital is also covered by the Financial Services Compensation Scheme (FSCS). Getting started with eToro is as simple as it gets – as you can open an account in minutes online or via the mobile investment app. You can easily deposit and withdraw funds too – with eToro supporting UK debit/credit cards, e-wallets, and bank transfers.

Pros:

  • Super user-friendly online trading platform
  • Buy stocks without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 2,400+ stocks listed on the UK and international markets
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

67% of retail investors lose money trading CFDs at this site

2. Libertex – Trade Vanguard ETFs with ZERO Spread and Leverage

Libertex was one of the first platforms to bring trading services to the online scene. The broker specializes in CFD instruments – meaning that you can’t buy the underlying asset. Instead, the platform allows you to trade Vanguard ETFs without taking ownership.

Although CFDs are not suitable for long-term investments, they do allow you to trade in a more sophisticated and flexible manner. For example, Libertex enables you to trade the Vanguard FTSE Europe ETF with leverage of up to 1:5.

This means that a £100 account balance would permit a trade value of £500. In other words, you are multiplying your stake by a factor of 5. Additionally, Libertex offers buy and sell markets on all of its supported CFDs. This means that by placing a sell order, you can speculate on the Vanguard ETF going down in value. 

libertex vanguard fund

This could be a useful tool during a bearish market. Additionally, Libertex is really competitive in the fee department. Not only can you trade the Vanguard FTSE Europe ETF without paying any spreads, but the commission per slide is just 0.11%. If you’re keen to trade CFDs in other marketplaces – Libertex supports stocks, indices, metals, energies, forex, and more.     

In terms of getting started, Libertex requires a minimum deposit of just £100. After you initially fund your account, the minimum goes down to just £10 per transaction. The CFD trading platform supports a variety of payment methods – including debit cards, credit cards, bank transfers, and e-wallets.

Pros:

  • Zero spread CFD trading
  • Very competitive commissions
  • Good educational resources
  • Long established broker
  • Trade stocks and indices like the Dow Jones
  • Compatible with MT4
  • Great choice of markets

Cons:

  • Only offers CFDs

83% of retail investors lose money trading CFDs at this site.

 

How to Buy the Best Vanguard ETFs UK

To conclude this comprehensive guide on the best Vanguard ETFs UK – we are now going to show you how to make an investment commission-free. For this, we will walk you through the process with FCA broker eToro.

Step 1: Open an Account and Upload ID

Head over to the eToro website and open an account.

eToro sign up

You will be asked to enter a range of personal information – such as your name, address, and national insurance number.

Step 2: Confirm Identity

Before you can make a withdrawal – or deposit more than $2,250 – eToro will need to verify your identity. You can do this at a later date, but it’s best to get it out of the way now. All you need to do is upload a copy of [A] your passport or driver’s license and [B] a recently issued utility bill or bank account statement.

Step 3: Make a Deposit

You will now need to make a deposit so that you can invest in your chosen Vanguard ETF. eToro supports debit/credit cards, Paypal, Skrill, Neteller, and bank transfers.

Step 4: Search for a Vanguard ETF

Now that you have active funds in your eToro account – you can search for your chosen Vanguard fund. In our example below, we are looking to invest in the Vanguard Small-Cap Growth ETF.

buy vanguard fund etoro

Step 5: Invest in Vanguard ETF

Once you have found the Vanguard ETF you wish to invest in – click on the ‘Trade’ button. You will then see an order box appear like the one below.

buy vanguard fund etoro

To complete your investment – enter your stake in the ‘Amount’ box – ensuring you meet a $50 minimum. In clicking on ‘Open Trade’ – eToro will execute your commission-free Vanguard investment!

Conclusion

In summary, Vanguard offers a great number of ETFs that allow you to diversify across heaps of financial markets. This includes everything from index funds, dividend stocks, high-grade bonds, and the emerging markets.

No-two Vanguard funds are the same – in terms of both risk and potential rewards. As such, make sure you research on a DIY basis before choosing an ETF.

Once you know which Vanguard fund interests you – you’ll then need to choose a trusted FCA-regulated broker.

We like eToro in this respect – as the platform doesn’t charge any dealing commissions or ongoing fees when you invest in a Vanguard ETF. Plus, the minimum deposit is just $50 (about £35) – which is much lower than the £500 required when investing directly on the Vanguard website!

eToro – Buy the Best Vanguard ETFs UK with 0% Commission

67% of retail investor accounts lose money when trading CFDs with this provider.

 

FAQs

What are the best Vanguard ETF funds 2021?

We found that the best Vanguard ETF funds 2021 include the Vanguard S&P 500 UCITS ETF, Vanguard Small-Cap Growth ETF, and the Vanguard Total Bond Market ETF. With that said, each Vanguard equity fund comes with varying risks and rewards - so make sure your chosen ETF meets your financial goals. On top of Vanguard, it's also worth considering ETFs from iShares and MSCI.

What is the minimum to invest in a Vanguard fund UK

This depends. If you choose to invest directly via the Vanguard website - the minimum is £500. If, however, you choose a broker like eToro - the minimum is just $50 (about £35).

How do you invest in the best Vanguard ETFs 2021?

You can invest directly through the Vanguard website. But, by using an online broker - you will likely be able to invest a much smaller amount - as Vanguard requires a lump sum of £500 or more. You can also invest via an ISA and SIPP

How do you make money from the best Vanguard ETFs 2021?

Like most ETFs, Vanguard funds allow you to earn money through capital gains (increase in the NAV) and dividends.

What is Vanguard ETF is low risk?

One of the lowest risk Vanguard funds is that of its Short-Term Bond ETF. This is because the ETF invests in low-risk assets like US government bonds and high-grade corporate bonds.

 

Kane Pepi

About Kane Pepi PRO INVESTOR

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.

Questions & Answers (0)

Have a question? Our panel of experts willanswer your queries.Post your question