With inflationary pressures continuing to weigh on global markets, investors are increasingly looking for ways to safeguard their portfolios.
While broad-market ETFs tracking major indices like the S&P 500 remain investor favorites, sector-focused and dividend-oriented funds are gaining momentum for their ability to provide consistent income and serve as a hedge against inflation.
With expense ratios as low as 0.03%, Vanguard ETFs offer investors an accessible and affordable way to tap into high-growth sectors, making them an attractive option for long-term investors aiming to maximize returns without excessive fees cutting into their gains.
Picks for you
Vanguard Utilities ETF (VPU)
The Vanguard Utilities ETF (NYSEARCA: VPU) seeks to track the investment performance of the MSCI US Investable Market Utilities 25/50 Index, a benchmark comprising large-, mid-, and small-cap U.S. stocks in the utilities sector.
This index is composed of companies providing essential services such as electricity, gas, and water, as well as independent power producers and distributors, including both nuclear and nonnuclear facilities.
The appeal of the Vanguard Utilities ETF lies in the inherent stability of utility companies. These firms typically benefit from steady demand for their services, with pricing often regulated by governments, leading to predictable revenue and earnings streams.
Moreover, long-term growth drivers such as renewable energy adoption and rising energy needs from AI data centers further support the sector’s expansion. This combination of stability and growth potential allows VPU to offer an attractive dividend yield of 2.9%, making it a solid choice for income-focused investors.
VPU offers a well-diversified portfolio comprising 69 utility stocks, with its largest sector exposure allocated to Electric Utilities at 61.90%, followed by Multi-Utilities at 24.60% and Gas Utilities at 4.80%, among others.
Currently, VPU is trading at $167.10 and has gained nearly 5% year-to-date (YTD). Its historical performance reflects its consistency, with a 3-year return of 8.40%, a 5-year return of 8.09%, and a strong 10-year return of 9.15%. Since its inception on January 26, 2004, VPU has generated an impressive annualized return of 9.60%.
The fund has an expense ratio of 0.09%, meaning for a $500 investment, the annual fee amounts to $0.45, making it a highly cost-effective choice for investors seeking inflation-resistant, stable returns.
Vanguard International High Dividend Yield ETF (VYMI)
The Vanguard International High Dividend Yield ETF (NYSEARCA: VYMI) tracks the FTSE All-World ex US High Dividend Yield Index, focusing on high-dividend companies in developed and emerging markets outside the U.S.
VYMI holds a diversified portfolio of 1,491 stocks, with top holdings including global blue-chip names like Novartis AG, Roche Holding, Toyota Motor Corp (NYSE: TM), and Nestlé SA. The fund allocates approximately 45% to Europe, 25% to the Pacific region, and 20% to emerging markets, ensuring broad geographic diversification.
Currently trading at $75.84, VYMI delivers an attractive 4.97% dividend yield, nearly three times the yield of the S&P 500. With a low expense ratio of 0.17%, investors pay only $0.85 annually on a $500 investment, making VYMI a cost-effective, income-focused option with strong inflation-resistant potential.
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