1 top Vanguard ETF to buy before the next market crash

The Vanguard High Dividend Yield ETF (VYM) is the top Vanguard fund analysts highlight before a possible market crash. As the third-largest dividend ETF, it offers a 2.3% yield and has shown roughly 170 basis points less annualized volatility than the Vanguard S&P 500 ETF over the past decade.

Fresh analysis published July 12, 2026 warns that investors should prepare for the next downturn rather than wait for it. For many, that means looking at Vanguard exchange-traded funds that can offer income and steadier behavior when headlines turn ugly.

Key Takeaways

• The Vanguard High Dividend Yield ETF (VYM) is framed as crash insurance that does not require giving up long-term upside.
• Over the past decade, VYM annualized volatility was about 170 basis points below the Vanguard S&P 500 ETF (VOO).
• VYM carries a 2.3% yield, holds 605 stocks, and charges a 0.04% expense ratio.
• Top holdings include Caterpillar, ExxonMobil, and Johnson & Johnson, firms with multi-decade dividend increase streaks.
• VOO remains a go-to for long-term wealth building, but holders should weigh fees, taxes, and concentration.

Why is VYM a top Vanguard pick before a crash?

According to recent coverage, market participants seeking crash insurance may want to examine VYM. Dividend-paying stocks tend to be less volatile than companies that do not pay payouts, and VYM is the third-largest dividend ETF by assets.

The fund had about $96.1 billion in assets under management at the time of the report. That scale, combined with income generation and comparatively tame volatility, makes it appealing to retirees and growth-focused investors looking to balance a portfolio.

Some of VYM largest names, including Caterpillar, ExxonMobil, and Johnson & Johnson, have raised dividends annually for decades, including through past bear markets and recessions. When markets go haywire, that dependable income can act as a buffer.

How does VYM compare with the Vanguard S&P 500 ETF?

The trade-off is clear: VYM lagged the broad market during the recent bull run but delivered lower volatility. Over 10 years, its annualized volatility was 170 basis points below VOO.

VOO tracks 500 large U.S. companies at a 0.03% expense ratio and remains the largest ETF by assets. Separate reporting notes VOO averaged 12.7% annualized returns over the past 20 years, though analysts caution that 8% to 10% is a more realistic long-term planning range.

Long-term holders of S&P 500 exposure have also benefited from a remarkable track record. According to Crestmont Research cited in market commentary, every rolling 20-year period in the index history has ended with positive total returns, even through the Great Recession, the 2020 COVID crash, and the 2022 bear market.

What hidden costs should Vanguard investors watch?

Low fees are a Vanguard hallmark, but the sticker price is not the full story. AOL analysis of VOO notes that its 0.03% expense ratio masks quarterly distributions that can trigger taxable events in brokerage accounts. Competitors such as SPLG (0.02%) and FXAIX (0.015%) track the same index at lower stated costs.

VYM charges 0.04%, or $4 annually on a $10,000 stake, still minimal during volatile stretches. Investors can also reinvest dividend income during downturns, building larger positions before the rebound.

Can Vanguard ETFs recover after a downturn?

No one can time the next crash, but history favors patient Vanguard holders. The S&P 500 has recovered from every bear market on record, and U.S. stocks do not stay mired in downturns forever.

Whether you choose VYM for defensive income or VOO for broad index exposure, the through-line is the same: prepare early, keep costs low, and stay invested. For more coverage on ETF strategy and market risk, see our Fintech & Crypto Alerts hub. Detailed fund data is available via Yahoo Finance.