The Best Vanguard ETF to Invest $1,000 In Right Now

Key Points

• Several top Vanguard ETFs have performed so well in 2025 that they don't have much more room to run.

• Other Vanguard ETFs have such premium valuations that they could be at risk if the market falls.

• However, one Vanguard ETF should fare well regardless of what the market does.

• 10 stocks we like better than Vanguard Utilities ETF ›

Choices, choices. Baskin-Robbins is famous for offering 31 flavors of ice cream. Heinz's famous slogan mentioned "57 varieties" of products (although the company actually has more than that). If you're an investor, Vanguard markets 97 exchange-traded funds (ETFs).

You don't have to be overwhelmed by the number of ETF options, though. Here's arguably the best Vanguard ETF to invest $1,000 in right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Crossing contenders off the list

Before we get to what I view as the best Vanguard ETF to buy, let's first cross a few worthy contenders off the list. I'll start with the top 10 best-performing Vanguard ETFs so far this year. All are international funds, with the Vanguard International High Yield Dividend ETF and Vanguard FTSE Europe ETF at the top of the list.

Am I bearish on Vanguard's international ETFs? Not at all. However, I question how much more room they have to run after many of these funds have racked up year-to-date gains of over 20%.

I think we can also eliminate Vanguard's best-performing ETFs since inception, too. This list includes the Vanguard Russell 1000 Growth ETF, the Vanguard S&P 500 Growth ETF, and the always popular Vanguard S&P 500 ETF.

To be sure, these ETFs remain great long-term picks. But if you're interested in the best Vanguard ETF to invest $1,000 in right now, they share a common issue: sky-high valuations. As a case in point, the Vanguard S&P 500 ETF's price-to-earnings (P/E) ratio is 27.6. The historical average P/E ratio for the fund's underlying index, the S&P 500 is 16.1. Even if we look only at the past 10 years, the average earnings multiple is still well below the current level.

The risk of a near-term major stock market downturn is concerning, in my opinion. The most recent U.S. jobs numbers were weak. The full impact of higher tariffs has yet to be felt by American consumers and companies, but many economists predict it's only a matter of time before that changes. Buying Vanguard ETFs with steep valuations right now doesn't seem to be the smartest move.

The best Vanguard ETF to buy now

What is the best Vanguard ETF to buy now? My vote goes to the Vanguard Utilities ETF (NYSEMKT: VPU). This fund owns 69 U.S. utility stocks. Its top holdings include NextEra Energy, Constellation Energy, Southern Company, Duke Energy, and Vistra Energy.

Although the Vanguard Utilities ETF isn't among Vanguard's top 10 best performers in 2025, it has nonetheless been a solid winner. The fund is up around 15% this year, good enough to land it a No. 12 spot among all Vanguard ETFs based on year-to-date performance.

Despite the nice returns, the Vanguard Utilities ETF's valuation isn't all that worrisome. Its P/E ratio is 21.4 is well below the S&P 500's earnings multiple. Moreover, the forward price-to-earnings ratio of the S&P 500 utility sector, which includes most of the ETF's holdings, is 19 -- even less concerning.

If the stock market continues chugging away, I expect the Vanguard Utilities ETF will rise in tandem. Many of the stocks in the ETF's holdings have solid growth prospects boosted by increasing demand for artificial intelligence (AI). The data centers that host AI systems require massive amounts of power.

But what if the stock market sinks as tariffs hurt the economy? Investors often flock to utility stocks during such downturns because the stocks are viewed as safe havens. Most utilities also have relatively low exposure to the negative effects of tariffs.

A happy medium

Granted, the Vanguard Utilities ETF could decline if the economy sours too much. However, I suspect it would hold up better than many equity ETFs offered by Vanguard. Also, if the economy strengthens, other Vanguard ETFs would likely deliver greater returns. Still, I view this ETF as a sort of a "happy medium" that should appeal to many investors.

Should you invest $1,000 in Vanguard Utilities ETF right now?

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Constellation Energy, NextEra Energy, and Vanguard S&P 500 ETF. The Motley Fool recommends Duke Energy and Kraft Heinz. The Motley Fool has a disclosure policy.