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Vanguard Sector ETFs: Invest in Best Vanguard Sector ETFs

Vanguard Sector ETFs are administered by The Vanguard Group, a leading mutual fund company that manages several index mutual funds. Vanguard sector ETFs are set up as a separate class of shares of selected Vanguard index funds.

Vanguard index funds that offer ETF shares have two classes of shares. The first class of shares is called Admiral Shares. The Admiral Shares are conventional mutual fund shares that can be bought from or redeemed with the issuing index fund. The ETF shares are the other class of shares and they trade on the American Stock Exchange.

Breadth of Vanguard Sector ETFs

Vanguard offers ten sector ETFs and one industry group ETF. The sector ETFs span the ten sectors of the Global Industry Classification Standard jointly developed by Morgan Stanley Capital International (MSCI) and Standard & Poor’s. The sole industry group ETF focuses on real-estate investment trusts (REITs).

Investment Approach of Vanguard Sector ETFs

The Vanguard ETFs as well as sector and industry group index funds are designed to track a target index. The target index is the MSCI US Investable Market Index for the corresponding sector or industry group. The MSCI sector indexes are subsets of the MSCI US Investable Market 2500 Index. The MSCI US REIT Index is the target index for the Vanguard REIT Index Fund.

Expense Ratio of Vanguard Sector ETFs

The expense ratio for all Vanguard sector ETFs except the Vanguard REIT ETF is 0.10%. The expense ratio for the Vanguard REIT ETF is 0.12%.

Trading Vanguard Sector ETFs

Vanguard Sector ETFs may be purchased in ’round lots’ of 100 shares or smaller with the minimum number being one share. Subject to certain restrictions, Vanguard allows existing Admiral Class shareholders to convert their shares into shares of the corresponding ETF.

AlphaProfit Take on Vanguard Sector ETFs

Vanguard ETFs are based on benchmark indexes provided by MSCI. The MSCI indexes are reconstituted quarterly and reflect changes in equity markets in a relatively timely manner. The MSCI sector indices tend to be more broadly diversified. As such, Vanguard sector ETFs generally include a greater number of stocks and cover more market capitalization segments than sector ETFs offered by other ETF families.

The expense ratios of Vanguard ETFs are generally lower than those of most competing ETFs. The expense ratios of Vanguard ETFs are also generally a tad lower than those of the Admiral Shares offered by the corresponding Vanguard index fund.

The liquidity of Vanguard ETFs has generally been lower than those of SPDR ETFs. This in turn may translate into higher bid-ask spreads.

Since Vanguard ETFs are set up as a class of index fund shares, significant net redemptions of the Admiral Class mutual fund shares may adversely affect the tax efficiency of the ETF shares.

With just one industry group offering, Vanguard ETFs offer slim pickings for investors seeking industry group ETFs.

For most retail investors, Vanguard ETFs offer a less-onerous means to own shares in Vanguard sector index funds. ETF investors do not have to come up with the relatively large minimum initial investment required to own Admiral Shares. Unlike Admiral Share investors, ETF investors are not required to hold their shares for one year to avoid the short-term redemption fee.

Vanguard Sector ETF Recommendations

AlphaProfit Sector Investors’ Newsletter is the premier resource for sector investors. The Newsletter offers recommendations on Vanguard sector ETFs. The Newsletter and its model portfolios have frequently been ranked #1 by Hulbert Financial Digest.

About AlphaProfit MoneyMatters

AlphaProfit MoneyMatters is a free e-letter distributed to registered users of AlphaProfit’s website. The e-letter analyzes the economy, markets, and sectors and provides money-making insights on stocks, exchange-traded funds, and mutual funds. AlphaProfit MoneyMatters is edited by Dr. Sam Subramanian acclaimed for his financial acumen and analytical skills. Sign Up for ETF Newsletter.

List of Vanguard Sector ETFs

Vanguard ETFSymbolInception DateVanguard Index Fund Offering ETF, Admiral Shares TickerUnderlying MSCI-US-IM IndexFocus Area of ETF
Vanguard Consumer Discretionary ETFVCR01/26/2004Vanguard Consumer Discretionary Index Fund, VCDAXConsumer DiscretionaryMedia, Entertainment, Home Improvement Retail, Restaurants
Vanguard Consumer Staples ETFVDC01/26/2004Vanguard Consumer Staples Index Fund, VCSAXConsumer StaplesFood Products, Beverages, Tobacco, Household Products
Vanguard Energy ETFVDE09/23/2004Vanguard Energy Index Fund, VENAXEnergyIntegratedOil, Oil & Gas Exploration & Production, Energy Service
Vanguard Financials ETFVFH01/26/2004Vanguard Financials Index Fund, VFAIXFinancialsDiversified Banks, Property & Casualty Insurance, Regional Banks, REITs
Vanguard Health Care ETFVHT01/26/2004Vanguard Health Care Index Fund, VHCIXHealth CarePharmaceuticals, Biotechnology, Health Care Equipment
Vanguard Industrials ETFVIS09/23/2004Vanguard Industrials Index Fund, VINAXIndustrialsIndustrial Conglomerates, Aerospace & Defense, Heavy Equipment & Machinery
Vanguard Information Technology ETFVGT01/26/2004Vanguard Information Technology Index Fund, VITAXInformation TechnologyComputer Hardware, Communication Equipment, Semiconductors, Software
Vanguard Materials ETFVAW01/26/2004Vanguard Materials Index Fund, VMIAXMaterialsDiversified Chemicals, Steel, Specialty Chemicals
Vanguard REIT ETFVNQ09/23/2004Vanguard REIT Index Fund, VGSLXREITRetail REITs, Specialized REITs, Residential REITs, Office REITs
Vanguard Telecom. Services ETFVOX09/23/2004Vanguard Telecommunication Services Index Fund, VTCAXTelecom. ServicesIntegrated Telecommunication Services, Wireless Telecommunication Services
Vanguard Utilities ETFVPU01/26/2004Vanguard Utilities Index Fund, VUIAXUtilitiesElectric Utilities, Multiutilities, Independent Power Producers, Gas Utilities

Must-read Articles on Sector Investing

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

High-potential diversified portfolios can be constructed by dividing assets among a group of sector funds. This approach gives the investor flexibility to over-weight or under-weight certain sectors versus broadly diversified indexes. 'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.' If all of this sounds confusing, you are not alone.

Sector Mutual Funds: How to Pick Winning Sector Funds and Avoid Losers

If you are looking to earn great returns from the stock market sector mutual funds are right up your alley. Sophisticated investors recognize the potential sector mutual funds offer and know how to make such funds work for them. You can consistently beat the market by investing in the right sector mutual fund at the right time. In fact, you can make money even in bear markets.

Sector ETFs: Invest in the Best Sector ETF Consistently

Sector ETFs are among the most potent investment vehicles that allow individual investors to exploit advantages previously available only to large institutions. You can beat the market by investing in the right sector ETF at the right time. In fact, you can actually make money even when the overall market is tanking. However all too often, investors use sector ETFs inappropriately and get their fingers burnt.

New ETF and Mutual Fund Recommendations

ETF Mutual Fund RecommendationsThe Fidelity and ETF Core and Focus model portfolios have gained at annualized rates of 14.6% and 17.8%, respectively since 1994. The model portfolios will be repositioned with new mutual fund and ETF recommendations on Friday, June 28. Learn more about AlphaProfit's Free and Premium Service investment newsletters.

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