Aggressive Index Funds: A Guide to Investing Wisely

Investing in aggressive index funds can be a smart move for those willing to take on higher risk in pursuit of greater potential returns.

Aggressive index funds typically have a higher concentration of stocks in their portfolios, often with a focus on growth-oriented sectors like technology and healthcare.

They're designed for investors who can stomach market volatility and are looking to grow their wealth over the long term.

By investing in a broad range of stocks, aggressive index funds offer diversification benefits that can help reduce risk.

Vanguard Growth Index (VIGRX) is a top performer among large-growth category peers, ranking in the top third or top quartile for one-, three-, five-, and 10-year periods.

The fund's change to the CRSP US Large Cap Growth Index on April 16, 2013, seems to be a wise move, as it's now outperforming its peers.

VIGRX returns rank in the 49th percentile for 15-year returns, which is an upward trend.

This fund is a great option for aggressive investors, especially considering the current market and economic environments that favor mid-cap stocks and growth stocks.

Vanguard Growth Index (VIGRX) is a top performer, ranking in the top third or top quartile for the one-, three-, five- and 10-year periods compared to large-growth category peers.

The fund changed its bogey to the CRSP US Large Cap Growth Index on April 16, 2013, and has seen an upward trend in returns since then.

VIGRX's 49th percentile rank for 15-year returns is a notable achievement, showing its long-term potential.

Vanguard Explorer (VEXPX) is a small-cap growth stock fund that uses a fundamental approach to pick the best stocks from the Russell 2500 Index.

This fund has a year-to-date gain of 6.9%, crushing the 2.1% gain on the S&P 500 Index.

The expense ratio for VEXPX is low at 0.51%, making it a cost-effective option for investors.

VIGRX is a solid choice for aggressive investors. It tracks the CRSP US Large Cap Growth Index, which has been a good bogey for the fund. The change in bogey in 2013 has been working well, with VIGRX returns ranking in the top third or top quartile for the one-, three-, five- and 10-year periods. This is an upward trend, considering the 49th percentile rank for 15-year returns. The market and economic environments are currently shaping up to be ideal for growth stocks.

Vanguard Explorer is a small-cap growth stock fund that uses a fundamental approach to pick the best of the Russell 2500 Index. This blend of small-cap and mid-cap growth stocks makes for a solid combination of the fastest-growing stocks in the market.

The fund has a year-to-date gain of 6.9%, which crushes the 2.1% gain on the S&P 500 Index. This performance is impressive, especially considering the tough 2014 for small caps.

With an expense ratio of 0.51%, Vanguard Explorer is a relatively low-cost option for aggressive investors. The minimum initial investment is $3,000, which may be a barrier for some investors.

The fund's focus on small-cap and mid-cap growth stocks can make it more volatile than other index funds. However, for investors who are willing to take on more risk, Vanguard Explorer offers the potential for higher returns.

The Vanguard Mid-Cap Growth Index (VMGIX) is a top performer among mid-cap growth funds, with a year-to-date return of 6.4%, triple the gain of the S&P 500 index.

VMGIX has consistently delivered strong results, with its one-, three-, and five-year returns ranking in the top quartile compared to other mid-cap growth funds.

Its low expense ratio of 0.23% is a significant advantage for investors, as it keeps costs down and allows more of your money to work for you.

The minimum initial investment for VMGIX is $3,000, which may be a barrier for some investors, but it's a relatively modest amount compared to other investment options.

Here are some key statistics about VMGIX:

When choosing an index fund, it's essential to consider the fees associated with it. The management fee for this particular fund is 0.15%.

The fund also charges acquired fund fees and expenses, which amount to 0.04%. This is in addition to the management fee.

Other expenses, however, are relatively low at 0.00%. This is a significant advantage for investors who want to keep their costs down.

The overall expense ratio of the fund is 0.19%. This includes all the fees and expenses mentioned above.

The fund also offers fee waivers, which can reduce the expense ratio to 0.15%. This is a great benefit for investors who want to save on costs.

Here's a breakdown of the fees and expenses:

An aggressive investment strategy is all about taking a higher degree of risk to maximize returns. This typically means emphasizing capital appreciation over income or safety of principal.

A substantial weighting in stocks, possibly with little or no allocation to bonds or cash, is characteristic of an aggressive investment strategy. Young adults with smaller portfolio sizes are often recommended to use this approach because they have a lengthy investment horizon to ride out market fluctuations.

The aggressiveness of an investment strategy depends on the relative weight of high-reward, high-risk asset classes, such as equities and commodities. A portfolio with 75% equities and 15% fixed income would be considered quite aggressive, but it would still be less aggressive than one with 85% equities and 15% commodities.

An aggressive investment strategy typically emphasizes capital appreciation over income or safety of principal, making it suitable for young adults with smaller portfolio sizes.

Young adults can ride out market fluctuations due to their lengthy investment horizon, which reduces the impact of losses early in their career.

A high tolerance for risk is an absolute prerequisite for an aggressive investment strategy, regardless of the investor's age.

The aggressiveness of an investment strategy depends on the relative weight of high-reward, high-risk asset classes, such as equities and commodities, within the portfolio.

Portfolio A, with an asset allocation of 75% equities, 15% fixed income, and 10% commodities, would be considered quite aggressive, but less so than Portfolio B, which has an asset allocation of 85% equities and 15% commodities.

Even within the equity component of an aggressive portfolio, the composition of stocks can significantly affect its risk profile, with small-capitalization stocks being riskier than blue-chip stocks.

A high turnover strategy, which involves frequently buying and selling stocks, can drive higher returns but also increases the risk of poor performance due to higher transaction costs.

An aggressive strategy requires more active management than a conservative “buy-and-hold” strategy, as it is likely to be more volatile and may require frequent adjustments based on market conditions.

More rebalancing is also required to bring portfolio allocations back to their target levels, which can lead to higher fees due to the need for additional staff to manage the portfolio.

Business Involvement metrics can help investors gain a more comprehensive view of specific activities in which a fund may be exposed through its investments. Business Involvement metrics are not indicative of a fund's investment objective.

These metrics are calculated by BlackRock using data from MSCI ESG Research, which provides a profile of each company's specific business involvement. BlackRock leverages this data to provide a summed up view across holdings and translates it to a fund's market value exposure to listed Business Involvement areas.

Business Involvement metrics are designed only to identify companies where MSCI has conducted research and identified as having involvement in the covered activity. It is possible there is additional involvement in these covered activities where MSCI does not have coverage.

Business Involvement metrics are only displayed if at least 1% of the fund's gross weight includes securities covered by MSCI ESG Research.

An aggressive investment strategy typically refers to a style of portfolio management that attempts to maximize returns by taking a relatively higher degree of risk.

For an aggressive investment strategy to be suitable, a high tolerance for risk is an absolute prerequisite, regardless of the investor's age.

Aggressive investment strategies are typically thought to be suitable for young adults with smaller portfolio sizes, as they can ride out market fluctuations due to their lengthy investment horizon.

Investment advisors do not consider this strategy suitable for anyone else but young adults unless such a strategy is applied to only a small portion of one's nest-egg savings.

A portfolio with an asset allocation of 75% equities, 15% fixed income, and 10% commodities would be considered quite aggressive, since 85% of the portfolio is weighted to equities and commodities.

Even within the equity component of an aggressive portfolio, the composition of stocks can have a significant bearing on its risk profile, with small-capitalization stocks being riskier than blue-chip stocks.

Dividing all available money equally into just 5 different stocks would be more aggressive than dividing all money equally into 20 different stocks.

A high turnover strategy, seeking to chase stocks that show high relative performance in a short time period, can create higher returns, but also drive higher transaction costs, thus increasing the risk of poor performance.