11 Vanguard ETFs for a Patient, Low-Cost Portfolio

For a patient investor, the choice of ETFs is not about chasing last month's winners. It's a disciplined selection of tools to capture market returns over decades, anchored in the principle that you get what you don't pay for. The goal is to build a portfolio where the compounding engine runs efficiently, with costs pared to the bone. This philosophy rejects the noise of short-term performance, which is a poor predictor of future success.

The evidence supports this long-term view. Over the past decade, 84% of Vanguard ETFs have outperformed the returns of their peer-group averages. That track record is not a fluke of market timing, but a direct result of the firm's relentless focus on cost efficiency. Vanguard's founder, John C. Bogle, understood that investment expenses are a permanent tax on returns. By lowering costs-such as the expense ratio reductions on 168 share classes across 87 funds announced in early 2025-more of the market's growth stays in the investor's pocket.

For a buy-and-hold strategy, the metrics that matter are the expense ratio and the breadth of holdings. A fund with a 0.03% fee, like the Vanguard FTSE Developed Markets ETF, is designed to capture the long-term growth of its market segment without a costly intermediary. The data shows this approach works: 82% of all Vanguard ETFs have had no taxable capital gains distributions in the last 5 years, a sign of tax efficiency that further preserves capital for compounding. The bottom line is that in a volatile market, the investor's edge often comes not from stock-picking, but from owning the market at the lowest possible cost.

The Core Holdings: Building a Foundation

For a patient investor, the foundation of a portfolio is built on simplicity and comprehensiveness. The goal is to capture the broad market's growth over the long term, not to outguess it. This requires three essential, low-cost ETFs that together provide complete coverage of the major asset classes: U.S. stocks, international stocks, and U.S. bonds.

The first pillar is the Vanguard Total Stock Market ETF (VTI). With an expense ratio of just 0.03%, it offers the broadest possible exposure to the U.S. equity market. Unlike funds that track only the S&P 500, VTI includes small- and mid-cap stocks, effectively "casting the widest net possible." This ensures the portfolio captures the performance of the entire domestic economy, not just its largest companies.

The second pillar is the Vanguard Total International Stock ETF (VXUS), which carries a similarly low 0.05% expense ratio. This fund provides access to developed and emerging markets outside the United States. It's a critical component for diversification, as it helps balance the portfolio against any domestic market overvaluation and taps into growth opportunities in other regions.

The third and final pillar is the Vanguard Total Bond Market ETF (BND), which also has a 0.03% expense ratio. This fund holds a vast array of U.S. investment-grade bonds, from Treasuries to corporate debt. It serves as the portfolio's ballast, providing income and reducing overall volatility during periods of stock market turbulence.

Together, these three ETFs form a complete, low-cost portfolio. They cover the entire spectrum of investable assets, from the broadest U.S. equity exposure to international diversification and a stable bond component. For an investor focused on long-term compounding, this trio represents the bedrock upon which a resilient and efficient portfolio is built.

Strategic Additions: Targeted Exposures with a Value Edge

The core holdings provide a complete, low-cost foundation. Now, we turn to strategic additions that address specific diversification needs or offer compelling long-term characteristics. These are not tactical bets, but structural enhancements that a patient investor might consider to fine-tune a portfolio over a multi-year horizon.

First is the Vanguard FTSE Developed Markets ETF (VEA), which carries an expense ratio of just 0.03%. This fund offers efficient, low-cost access to the developed international markets-Europe, Japan, and the Pacific region-that are excluded from the U.S. total market. For a portfolio already holding broad U.S. and total international exposure, VEA provides a more targeted slice of the developed world. Its minimal fee ensures that the cost of this diversification is kept to an absolute minimum, a critical factor for long-term compounding.

Second, we consider the Vanguard International High Dividend Yield ETF (VYMI), with a 0.17% expense ratio. This fund provides exposure to high-yielding international stocks, a segment that has historically offered a risk premium. Its appeal is underscored by its recent performance, having returned over 35% in 2025 alone, and it offers a 3.74% dividend yield. For an investor seeking to boost income and potentially benefit from the re-rating of value-oriented international equities, VYMI is a focused tool. The yield itself acts as a buffer during market turbulence, a feature that aligns with a value-oriented, patient strategy.

Finally, the Vanguard Small-Cap ETF (VB) rounds out this trio with a 0.05% expense ratio. This fund offers efficient access to the small-cap segment of the U.S. market, a space that has historically provided a long-term risk premium. While the core Total Stock Market ETF (VTI) includes small-caps, VB provides a pure-play, low-cost vehicle for those who wish to overweight this segment. It ensures the portfolio is not overly concentrated in the mega-cap names that have dominated recent rallies, thereby maintaining a broader exposure to the economic engine.

These three additions are selected for their structural merits: low costs, targeted exposures, and alignment with long-term principles of diversification and risk-adjusted return. They are tools to build a more resilient and potentially rewarding portfolio over the decades.

Portfolio Construction and Risk Management

With the ETFs selected, the next step is to weave them into a cohesive, buy-and-hold portfolio. The principle is one of simplicity and discipline: use the core holdings for broad market exposure and the strategic additions for targeted enhancements. A common and effective starting point is to allocate the core holdings-VTI, VXUS, and BND-to make up 60% to 80% of the total portfolio. This provides a complete, low-cost foundation across U.S. stocks, international stocks, and bonds. The remaining 20% to 40% can then be directed toward the strategic additions-VEA, VYMI, and VB-based on an investor's specific long-term goals, risk tolerance, and desired exposure to international developed markets, high-dividend stocks, or small-cap equities.

This structure ensures the portfolio is built on a wide moat of market coverage, while the strategic pieces add layers of diversification or income potential. The key is to avoid overcomplicating the mix. Each ETF serves a clear purpose, and the portfolio's strength comes from the combination of low costs and broad diversification, not from a crowded list of niche funds.

The primary risk to monitor is not the ETFs themselves, but the investor's own discipline. As the market swings, the temptation to react to short-term volatility can be powerful. The evidence shows that volatility has defined 2025, leaving investors fatigued and cautious. In such an environment, the disciplined investor must resist the urge to sell low or chase recent winners. The portfolio's design-built on low-cost, broad market exposure-relies on the investor's patience to stay the course. Emotional decisions driven by fear or greed are the greatest threat to long-term compounding.

A secondary, structural risk is the sustainability of the passive investing model that these ETFs represent. The industry's record plowing of $1.5 trillion into ETFs in 2025 shows immense popularity, but a shift in investor behavior away from indexing could affect liquidity and pricing. More directly, the investor should monitor Vanguard's continued commitment to lowering costs. The firm's historic fee cuts have been a cornerstone of its value proposition, and any reversal or slowdown in this trend would erode the portfolio's cost advantage. For now, the firm's track record suggests this commitment remains strong, but it is a factor to keep in the background.

The bottom line is that a patient investor's edge comes from the portfolio's design and their own resolve. By anchoring the portfolio in low-cost, broad-market ETFs and using targeted additions for specific goals, the investor builds a resilient structure. The real work begins after the portfolio is built: maintaining the discipline to hold through the inevitable market turbulence, knowing that the long-term compounding engine is already running efficiently.