Best Vanguard Funds UK for 2024
Vanguard is an issuer of some of the world’s most well-known index funds. An index fund is essentially an exchange-traded funds (which can be thought of as a group of stocks that trade as a single share) that follow a particular index, such as the FTSE 100.
This article will explain what investing in Vanguard funds UK entails, including the pros and cons of adding them to an investment portfolio and provide a list of the five best Vanguard funds UK to watch this year.
Table of Contents
What are Vanguard Funds UK?
Vanguard is one of the most well-known ETF issuers globally. It is an American investment advisor with nearly $8 trillion in assets under management. The company’s founder, John C. Bogle, was an investing luminary who championed low-cost investing with index funds, often citing the benefits of broad diversification for investment portfolios and challenging the belief that it is possible to ‘beat the market’ over the long term by stock picking.
ETFs are groups of stocks that are traded as a single share. This allows an investor to invest in many different companies at the same time with just one transaction. This enables investors to broadly spread their portfolio by investing in a number of different companies across different stock sectors.
The Vanguard funds described in this article are just a few of the many ETFs Vanguard has on offer. Two of them track indexes comprising UK companies specifically, one of them tracks the American stock market and the final two track developed and global economies.
Though Vanguard is based in the US, the best Vanguard funds listed in this article are available to UK investors as they trade on the London Stock Exchange. However, Vanguard also has funds listed on the New York Stock Exchange which are still available to UK investors with an international broker such as Admirals.
Best Vanguard Funds UK to Watch
As previously mentioned, Vanguard has many different ETFs on offer. The best Vanguard funds UK on this list provides a selection of the funds investors should familiarise themselves with as they learn more about index investing.
Of course, what is ‘best’ is subjective and will vary between investors. Remember that any form of investing involves the potential to gain but also the potential to lose. You can use the list below as a starting point to build upon your own research and even use an Invest.MT5 demo account with Admirals to practice your investing skills in a virtual environment before going live.
Here are the five best Vanguard funds UK to watch this year:
- Vanguard FTSE 100 ETF - The Top 100 UK Companies by Market Capitalisation
- Vanguard FTSE 250 ETF - The Top 250 UK Companies, Excluding Those in the FTSE 100
- Vanguard S&P 500 ETF - The Top 500 US Companies by Market Capitalisation
- Vanguard FTSE All-World ETF - Index Investing in the Broadest Sense, Covering More Than 95% of the Global Investable Market Capitalisation
- Vanguard FTSE Developed Europe ETF - Broad ETF Focused on Europe and the UK
Vanguard FTSE 100 ETF - The Top 100 UK Companies by Market Capitalisation
The Vanguard FTSE 100 ETF was established in 2012 and is comprised of the top 100 UK companies by market capitalisation. These tend to be large, well-established companies such as AstraZeneca, HSBC, BP, Rio Tinto, and Unilever, among others. The percentage each company makes up of the ETF is weighted according to the company’s market capitalisation.
The fund attempts to track the performance of the FTSE 100 index by investing in all of the stocks of the index in the same proportion as the index. The FTSE 100 index measures the performance of the domestic economy but in the broadest sense.
The index - and therefore the fund - has different weightings to each stock sector. Currently, it comprises 18.3% financials, 17.9% consumer staples, 13.1% energy, 13.1% health care, 11.0% consumer discretionary, 10.5% industrials and 8.3% basic materials.
The fund trades under the ticker symbol VUKE on the London Stock Exchange (LSE).
Two years after the Vanguard FTSE 100 ETF was established, Vanguard introduced the Vanguard FTSE 250 ETF. This fund tracks the top 250 UK companies, though it excludes those in the top 100. This means it tracks the largest 100 to 250 UK companies by market capitalisation.
These tend to be mid-cap companies such as Dechra Pharmaceuticals, IMI, Spectris, Howden Joinery Group, Intermediate Capital Group, Diploma, Tate & Lyle, Games Workshop, Marks & Spencer and Easyjet.
The Vanguard FTSE 250 fund and the FTSE 250 index currently comprise the following stock sector weightings: 41.5% financials, 16.7% industrials, 15.4% consumer discretionary, 8.8% real estate, 4.2% health care, 4.0% consumer staples, 3.1% technology, 2.2% energy, 1.8% basic materials, 1.4% utilities and 0.9% telecommunications.
The Vanguard FTSE 250 ETF trades under the ticker symbol VMID on the London Stock Exchange (LSE). Some investors combine this ETF with the Vanguard FTSE 100 ETF to compile a portfolio with a balanced exposure to most of the UK economy.
Vanguard S&P 500 ETF - The Top 500 US Companies by Market Capitalisation
The S&P 500 is one of the world’s most tracked stock market indexes. It represents the performance of the largest 500 companies in the United States by market capitalisation and is considered a benchmark for the health of the US economy.
Currently, the top 10 stocks in the Vanguard S&P 500 ETF are Apple (7.84% of the fund), Microsoft (6.94%), Amazon (3.05%), Nvidia (2.64%), Alphabet (Class A shares 2.06%), Alphabet (Class C shares 1.84%), Meta (Class A shares 1.67%), Berkshire Hathaway (Class B shares 1.64%), Tesla (1.56%) and United Health Group (1.29%).
Some investors in the UK and Europe combine this ETF with other funds covering the European and UK markets to cover most of the developed economies around the world.
You can also trade the S&P 500 index using CFDs (contracts for difference) which allows you to trade long and short, in rising and falling markets. Learn more in the How to Trade the SP500 Index article.
Vanguard FTSE All-World ETF - Index Investing in the Broadest Sense, Covering More Than 95% of the Global Investable Market Capitalisation
The Vanguard FTSE All-World ETF covers nearly the entire global stock market. Around 60% of the fund’s capital is allocated to American companies, as the fund is weighted by market capitalisation, and the US is the largest stock market in the world.
Besides the US, this fund also covers companies in the EU, Switzerland, the UK, Asian countries such as Japan and China and developing countries such as Indonesia, Turkey, and Colombia. In total, around 10% of the fund’s capital is invested in developing countries, also referred to as ‘emerging markets’.
There are currently 3,691 stocks held within the Vanguard FTSE All-World ETF with the top five allocations including 60.1% allocation to the US, 6.4% to Japan, 4.0% to the UK, 3.2% to China and 2.8% to France.
Vanguard FTSE Developed Europe ETF - Broad ETF focused on Europe and the UK
The Vanguard FTSE Developed Europe ETF employs a passive management approach by acquiring the stocks that track the performance of the FTSE Developed Europe Index which is comprised of large and mid-sized companies in developed markets in Europe.
The fund includes stocks from 16 countries with the top five following weightings: 24.3% UK, 17.7% France, 15.1% Switzerland, 12.9% Germany, 7.2% Netherlands. The fund also includes stocks from all stock market sectors as seen in the top 10 company list below.
The top 10 holdings in the fund include Nestlé, ASML, Novo Nordisk, Roche, LVMH, AstraZeneca, Shell, Novartis, HSCB and SAP. Nestlé accounts for 3.18% of the fund’s weighting.
The Vanguard FTSE Developed Europe ETF trades under the ticker symbol VEUR on the London Stock Exchange.
How to Invest in Vanguard Funds UK
With Admirals, you can invest in global stocks and ETFs with the following commissions:
- UK stocks – 0.1% of trade value, 1 GBP minimum commission.
- US stocks – From $0.02 per share, 1 USD minimum commission.
You can learn more about investing commissions on the Admirals Contract Specification page.
You can search for global stocks from the Invest.MT5 web platform and invest in four steps:
- Open an account with Admirals.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Why Invest in the Best Vanguard Funds UK?
To start with, investment decisions are always personal and dependent on the investor’s financial goals and individual circumstances. Index investing in Vanguard funds UK does have several pros and cons to be aware of.
Investing in the best Vanguard funds UK can offer broad diversification. Investors are able to spread their capital across entire economies, such as the UK or the US, or even across the entire (developed) world. One specific company falling on hard times or even going bankrupt may have a lesser impact on the overall portfolio that is so broadly spread.
However, it is important to note that systemic risk always remains. A recession or a black swan event such as the COVID-19 pandemic can cause markets to crash across the globe. Investing never comes without risk.
A good way to learn about how index investing works and experience the pros and cons for yourself is to use a demo account first. This allows you to invest in a virtual environment until you are ready to go live.
FAQs on Vanguard Funds UK
Which is the best Vanguard fund?
No single fund is the best fund. The choice entirely depends on each investor’s individual situation. For example, an investor who prefers very broad diversification might choose the Vanguard FTSE All-World ETF which represents the global stock market. Others might choose to focus only on the UK economy through the Vanguard FTSE 100 ETF. It is important to understand your circumstances first and then research the right fund for yourself.
Are Vanguard ETFs a good investment?
Generally, investing is done for the purpose of generating a return on capital while taking on an acceptable amount of risk (which is different for everyone). As with any form of investing finding a ‘good investment’ is the challenge. Therefore, it is important to do thorough research and exercise good risk management when investing. Vanguard ETFs attempt to provide a passive way to receive the performance of a stock market or region, rather than trying to pick individual stocks.
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