Are you thinking of investing in index funds? Check out the popular and highly-reputed company Vanguard and the exact Vanguard index funds to buy this year.
In 1976, Vanguard founder John Bogle pioneered indexing, a radical approach to investing from traditional, actively managed funds. He began the first index fund that followed the S&P 500 index. Now, the company has over 100 Vanguard funds that track indexes in the US and international markets for both stocks and bonds.
This article will give an overview of the top Vanguard index funds. We'll evaluate each fund's features and learn which one suits you and your specific goals as an investor.
10 Best Vanguard Index Funds To Buy and Hold
Vanguard index funds are some of the most famous investment vehicles available today, and for good reason.
Unlike actively-managed funds, index funds provide a low-cost way to track the performance of a given market or sector. In addition, index funds offer broad diversification, which can help mitigate risk. Still, it's essential to remember that index funds are not without risk.
The following are some of the best Vanguard index funds you might want to add to your portfolio:
1. Vanguard Total Stock Market Index Fund (VTSAX)
The Vanguard Total Stock Market Index Fund (VTSAX) offers investors exposure to the entire US stock market. The fund is managed by Vanguard, one of the largest investment management companies in the world.
VTSAX is a passively managed index fund that aims to track the Center for Research in Security Prices (CRSP) US Total Market Index, the benchmark index. The fund is one of Vanguard's biggest and most popular index funds, alongside VUG and VTI.
The minimum investment for VTSAX is $3,000, and the expense ratio is 0.04%. Due to more than 3,500 equities in this fund, investors can benefit from low costs, potential tax efficiency, and excellent diversification.
VTSAX is an excellent choice for investors who want broad exposure to the US stock market at a low cost.
2. Vanguard 500 Index Fund Admiral Shares (VFIAX)
If you're looking for an index fund that tracks the Standard & Poor's 500 Index (S&P 500), the Vanguard 500 Index Fund Admiral Shares (VFIAX) is a popular option. This fund has an expense ratio of 0.04%, which is low for an index fund. In addition, the minimum investment is $3,000, and the fund's asset class is a large-cap blend.
The VFIAX invests in stocks of companies in the S&P 500, which is made up of the largest 500 US companies according to market capitalization. The fund's diversification runs across many sectors, including technology, healthcare, financials, consumer discretionary, and industrials.
The fund's top holdings are Apple, Microsoft, Amazon, Facebook, and Berkshire Hathaway. If you're looking for a low-cost way to invest in a diversified portfolio of large-cap US stocks, VFIAX is an excellent option.
When you want to invest in the S&P 500 and diversify your portfolio outside the US, consider building a portfolio that invests in both VTSAX and VFIAX.
3. Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) tracks the performance of a benchmark index that measures the investment return of stocks issued by companies outside the United States.
VTIAX tracks the performance of the FTSE (Financial Times Stock Exchange) Global All Cap ex US Index. That is a float-adjusted, market capitalization-weighted index constructed from publicly traded companies in developed and emerging markets.
It is diversified across more than 5,400 holdings, with no single country representing more than 23% of the fund's assets. The fund has a reasonable expense ratio of 0.11%, significantly lower than the average actively managed international stock mutual fund. This will appeal to investors looking to increase their exposure to global markets outside the US.
4. Vanguard Real Estate Index Fund Admiral Shares (VGSLX)
Vanguard Real Estate Index Fund Admiral Shares provides broad diversification across US Real Estate Investment Trusts (REITs), focusing on large-cap firms. REITs are a type of investment that have ownership in real estate and invest primarily in income-producing real property.
VGSLX was founded in 2004 and is domiciled in the United States. It tracks the performance of the Morgan Stanley Capital International (MCSI) US IMI Real Estate 25/50 Index, a broadly diversified investable market index of US REIT stocks.
These REITs are typically a little riskier and more volatile. They will likely fluctuate with the stock market. Sites that allow you to invest in actual properties, such as real estate crowdfunding platforms, are another way to gain exposure to real estate outside the stock market.
5. Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
Are you looking to invest in bonds? The Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) may be right for you. It is an index fund that tracks the performance of the US bond market. The fund invests in various bonds, including treasury, corporate, and mortgage-backed securities.
The fund has a low expense ratio of 0.05% and requires a minimum investment of $3,000. The VBTLX is an excellent choice for investors looking for a diversified way to invest in the bond market. The fund is suitable for long-term investments and has a history of outperforming its benchmarks. Overall, it is an excellent choice for investors looking for a low-cost way to invest in the bond market.
6. Vanguard Growth Index Fund Admiral Shares (VIGAX)
The Vanguard Growth Index Fund Admiral Shares (VIGAX) seeks to track the performance of the CRSP US Large Cap Growth Index. The fund invests in large-cap stocks that are expected to grow faster than the overall market.
VIGAX is a passively managed index fund trying to match the performance of the underlying index. The expense ratio for VIGAX is 0.05%, which is lower than the average expense ratio for growth funds. The minimum initial investment for VIGAX is $3,000, and there is no minimum subsequent investment.
7. Vanguard Balanced Index Fund Admiral Shares (VBIAX)
If you're looking for a solid investment that will offer you a little bit of everything, you can't go wrong with Vanguard Balanced Index Fund Admiral Shares (VBIAX). This fund is designed to provide investors with a mix of stocks and bonds, helping to promote stability and long-term growth.
The portfolio tracks two indexes representing US equities and US taxable bond markets, investing around 60% in stocks and 40% in bonds. And with its low expense ratio of 0.07%, VBIAX offers exceptional value. So if you're looking for a fund that will give you the best of both worlds, check out VBIAX.
8. Vanguard Dividend Growth Fund (VDIGX)
The Vanguard Dividend Growth Fund (VDIGX) focuses on investing in dividend-paying stocks. The fund aims to provide long-term capital growth by reinvesting dividends and capital gains. VDIGX invests in various stocks, including large-cap, mid-cap, and small-cap companies.
VDIGX has an expense ratio of 0.22%. The minimum investment for VDIGX is $3,000 for regular accounts and $500 for IRA accounts, making it a good choice for investors seeking long-term capital growth.
In addition, the fund offers a variety of reinvestment options, making it possible to grow your investment over time. However, it is essential to remember that stock prices can fluctuate, and there is always the potential for loss.
9. Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX)
If you're looking for a balanced investment approach with maximum tax efficiency, Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) may be a good fit. The fund's managers use a “tax-management” strategy to minimize your tax liability, which means they invest 50% in the stock market and 50% in tax-exempt bonds.
While there's no guarantee that VTMFX will outperform other investments, it's worth considering if you're looking for a way to keep more of your money in your pocket come tax time.
10. Vanguard Target Retirement Funds
Anyone who's ever invested in a Vanguard Target Retirement Fund can tell you that they're a great way to save for retirement. But what exactly are they? Vanguard Target Retirement Funds automatically rebalance your portfolio as you get closer to retirement.
That means if the stock market takes a dip, your fund will automatically sell some of your stocks and buy more bonds, which are less risky. And as you get closer to retirement, the fund will gradually shift more and more of your money into bonds until you're primarily invested in cash and annuities.
This way, you don't have to worry about managing your investment portfolio. Instead, the fund does it for you. So if you're looking for a hands-off way to save for retirement, a Vanguard Target Retirement Fund may be suitable.
Are Vanguard Index Funds a Good Investment
Vanguard index funds are a good investment because they offer a low expense ratio, meaning the fees associated with these funds are lower than those of actively managed funds. These index funds provide broad diversification, which can help minimize risk.
What Is The Most Popular Vanguard Fund?
The Vanguard Total Stock Market Index Fund (VTSAX) and Vanguard 500 Index Fund Admiral Shares (VFIAX) are two of the most popular Vanguard funds.
Conclusion – Vanguard Index Funds
Vanguard is one of the most highly-rated investment groups with top-rated index funds. Nonetheless, do your research and due diligence before choosing one of their funds.
Your choice of index fund largely depends on your financial goals and personal preferences, which should be clear before you select the index you want to track.
This article originally appeared on Wealth of Geeks.
Marjolein is the founder of Radical FIRE. She has a finance and economics background with a master’s in Finance. Radical FIRE is a personal finance blog that helps you live your dream life through making more money and investing. We want you to reach your financial goals and have fun while doing it!