The Smartest Vanguard ETF to Buy With $500 Right Now

Choosing where to invest is easy when the stock market is steadily rising. But what about when the market is as volatile as it has been in 2025? That's a different story.

Vanguard offers 91 exchange-traded funds (ETFs), so you can find great alternatives within its family of funds. However, so many options can be overwhelming, especially when market uncertainty reigns. Which is the smartest Vanguard ETF to buy with $500 right now?

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Top contenders

There's really never a wrong time to invest in the Vanguard S&P 500 ETF (NYSEMKT: VOO) if you're a long-term buy-and-hold investor. Though the benchmark index and the funds that track it almost sank into bear market territory earlier in 2025, this Vanguard ETF is now up year to date. I don't think long-term investors would go wrong by putting money into this fund now. However, the Vanguard S&P 500 ETF could remain highly volatile over the near term.

While most U.S. stocks have taken investors on wild roller-coaster rides this year, many international stocks have been big winners. Unsurprisingly, the Vanguard ETFs that own international stocks have performed well, too. Nine of the top 10 best-performing Vanguard ETFs year to date focus on companies based outside of the U.S.

I think several of these funds are still top contenders for investors' money. The best of the bunch is probably the Vanguard FTSE Europe ETF (NYSEMKT: VGK). It has soared by around 21% year to date. This fund owns shares of 1,241 companies based in major European markets. Its largest holdings include SAP, Nestle, ASML Holding, Novartis, and Roche.

The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is another good international ETF that should especially appeal to income investors. It's up roughly 16% year to date, and as its name indicates, it focuses on international stocks with high dividend yields. The ETF's dividend yield is about 4.3%.

My pick for the best Vanguard ETF right now

International stocks -- and Vanguard's international ETFs -- haven't performed as well over the last five to 10 years as they have more recently. My biggest reservation about choosing one of the Vanguard international ETFs as the best pick to buy now is that the global market dynamics could change.

However, I think another Vanguard ETF should be an excellent alternative for investors, regardless of what happens in the market. I'm talking about the Vanguard Utilities ETF (NYSEMKT: VPU). This fund is up close to 10% year to date, earning it a spot on the list of the top 10 best-performing Vanguard ETFs of 2025 so far.

The Vanguard Utilities ETF owns 68 U.S. utility stocks. Its top holdings include NextEra Energy, Southern Company, Duke Energy, Constellation Energy, and American Electric Power.

Utility stocks typically hold up well during times of market volatility. Investors recognize that utility companies' businesses are more stable and reliable than most, with many of them operating as monopolies in the areas they serve. Utilities also often pay attractive dividends. The Vanguard Utilities ETF's dividend yield stands at about 2.9%.

The artificial intelligence (AI) trend is providing a nice tailwind for many utility stocks. The data centers that provide the computing power required by AI models require massive amounts of electrical power to operate, and the rapid growth of this computing infrastructure is pushing electricity demand in the U.S. higher. This factor gives the Vanguard Utilities ETF better growth prospects going forward than it might have had just a few years ago.

Like all Vanguard ETFs, the Vanguard Utilities ETF has low fees. Its annual expense ratio is only 0.09%, a fraction of the 1.01% average annual expense ratio of similar funds.

A couple of caveats

I'd be remiss if I didn't point out a couple of things about this ETF. First, it's not totally immune to overall market volatility. For example, at one point this year, the Vanguard Utility ETF fell to 8% below its previous high. Second, other Vanguard ETFs could deliver greater gains over the long term. However, if you're looking for the smartest Vanguard ETF to buy with $500 right now, I think the Vanguard Utility ETF is it.

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