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Vanguard offers a wide range of index funds, with over 70 options to choose from. These funds track various market indices, such as the S&P 500 and the Total Stock Market.
Investing in a Vanguard index fund can be a cost-effective way to diversify your portfolio, with expense ratios as low as 0.04%. This is significantly lower than actively managed funds, which can charge upwards of 1% or more.
Vanguard's index funds are designed to provide broad market exposure, making them a great option for long-term investors. By investing in a Vanguard index fund, you can own a small piece of the entire market, rather than trying to pick individual winners.
Types of Vanguard Funds
All-in-one funds are a great way to diversify your portfolio and reduce risk with just one fund. You can take a questionnaire to get help finding a bond to stock ratio for your account.
Vanguard offers a range of fund types, including 86 exchange-traded funds. These funds offer a comprehensive range of options for investors seeking diversified portfolios.
Low fees are a key benefit of Vanguard's fund family, which translates to more money in your pocket.
All-in-One
All-in-One funds are built to give you a complete broadly diversified portfolio and reduce your investment risk with just 1 fund.
Diversifying your holdings can help reduce market risk. You can take our investor questionnaire to get help finding a bond to stock ratio for your account.
All-in-One funds simplify your investment process, making it easy to manage your portfolio.
Mid-Cap
Mid-Cap funds like Vanguard Mid-Cap Index Fund ETF Shares offer exposure to mid-capitalization stocks with a low expense ratio of 0.04%.
This fund seeks to track the CRSP US Mid Cap Index and has an impressive 1.59% 30-day SEC yield.
Its top holdings include Amphenol Corp, Transdigm Group, and Constellation Energy.
Mid-caps have historically delivered excess returns relative to the S&P 500.
However, they have lagged behind the broader markets since 2018, and the performance gap has widened post-pandemic.
A well-balanced portfolio should consider including this equity group in case a trend reversal takes shape.
Small-Cap
Small-Cap funds are designed to track the performance of smaller companies with growth potential. The Vanguard Small-Cap Index Fund ETF Shares (VB) is a great example.
This fund mirrors the CRSP US Small Cap Index, making it a reliable choice for investors. With an expense ratio of just 0.05%, it's one of the lowest fees in the market.
The top three holdings in the VB fund are Targa Resources, Axon Enterprise, and Builders FirstSource, all well-established companies with impressive growth records. These companies have shown stellar revenue and earnings growth.
The VB fund offers a 30-day SEC yield of 1.45%, making it an attractive option for those seeking a robust yield. It's a great choice for long-term investors who are comfortable with higher risk in exchange for potential above-average growth.
International High Dividend
International High Dividend funds offer a way to diversify your portfolio and tap into foreign stocks with above-average dividend yields. The Vanguard International High Dividend Yield ETF (VYMI) is a top pick in this category.
It tracks the FTSE All-World ex US High Dividend Yield Index and has a reasonable expense ratio of 0.22%. The fund provides exposure to high-quality stocks like Toyota Motor Corp., Nestle SA, and Shell, which all offer yields greater than the S&P 500.
These top holdings are forecasted to have above-average dividend yields, making VYMI a reliable vehicle for dividend income. The fund, however, has lagged behind the S&P 500 since inception.
Value
The Vanguard Value Index Fund ETF Shares is an excellent choice for investors seeking reliable income and capital appreciation, with a low expense ratio of 0.04% and 30-day SEC yield of 2.30%.
This ETF tracks the CRSP US Large Cap Value Index, focusing on stocks with large market capitalizations and compelling valuations.
The VTV is distinguished by its top holdings, which include some of the most respected companies in the market, known for their strong management teams, solid business models, and consistent performance over the long term.
Berkshire Hathaway, Broadcom, and JPMorgan Chase are just a few of the high-quality companies that make up the fund's top three holdings, a testament to its strategy of investing in undervalued companies with strong fundamentals.
Dividend Appreciation
Dividend Appreciation Index Funds focus on stocks that have consistently increased their dividends year after year.
The Vanguard Dividend Appreciation ETF (VIG) is a prime example, tracking the S&P U.S. Dividend Growers Index.
This ETF has an expense ratio of 0.06% and a 30-day SEC yield of 1.81%.
Its top holdings include Microsoft, Apple, and Broadcom, all of whom have a long track record of regular dividend raises.
The fund has performed admirably, even if it hasn't delivered excess returns relative to the S&P 500 since inception.
Dividend growth is a reliable indicator of a healthy and robust business, which is why super-investors like Warren Buffett favor this strategy.
Information Technology
The Information Technology fund is a great option for those looking to invest in the tech sector. Vanguard's Information Technology Index Fund ETF Shares (VGT) focuses on large, medium-sized, and small U.S. companies operating in the information technology sector.
This fund has an expense ratio of 0.10% and a 30-day SEC yield of 0.58%. The top three holdings in this fund are Microsoft, Apple, and Nvidia, with a greater concentration in these companies compared to the VUG fund.
Investing in the tech sector can be a high-risk, high-reward strategy, but the current surge in the sector driven by advancements in artificial intelligence may make it a less significant risk. Artificial intelligence is set to revolutionize our daily lives, and this trend is expected to propel the tech bull market for years to come.
S&P 500
The S&P 500 is a group of 500 of the largest U.S. companies, which the Vanguard S&P 500 ETF tracks. This index has been the world's best value creator in recorded history.
Vanguard's S&P 500 ETF, VOO, has an ultra-low expense ratio of 0.03%. It's well diversified across economic sectors, but its top holdings are all from the tech sector.
The primary reason to own VOO is its potential for capital appreciation in a moderately low-risk manner. This makes it a great choice for long-term investors.
VOO's top holdings include Microsoft, Apple, Nvidia, Amazon, and Alphabet. These companies are all leaders in their respective industries and have a significant presence in the S&P 500.
The VOO provides exposure to the heart of the American economy, which is why it often forms the foundation of many professional and non-professional portfolios.
Socially Responsible Investing Options
Vanguard offers ESG funds that consider environmental, social, and governance issues.
These funds have differing investment styles and objectives, and invest in stocks and bonds. They're a great way to complement your portfolio with funds that reflect your values.
Yes, Vanguard does offer socially responsible investing options, and they're a great way to align your investments with your values.
Investment Options
You can hold a variety of investments in a Vanguard account, including mutual funds, ETFs, individual stocks, bonds, options, and CDs. This makes it easy to keep track of your portfolio and make changes as needed.
Vanguard offers a settlement fund, a money market mutual fund used to facilitate brokerage transactions. This fund helps to minimize the hassle of managing multiple accounts.
The most common investments held in Vanguard accounts are mutual funds and ETFs, including those from Vanguard and other fund families. This gives you access to a wide range of investment options.
Here are some of the most popular Vanguard funds, including the Total Stock Market Index Fund ETF Shares (VTI), which offers extensive exposure to the U.S. stock market with a low expense ratio of 0.03%.
You can also consider a lazy portfolio option, which involves investing with minimal effort. This can be achieved with a two-fund portfolio, a three-fund portfolio, or a four-fund portfolio, each with its own allocation of stocks and bonds.
1-Stock Diversified Portfolio
A 1-stock diversified portfolio might sound like an oxymoron, but some low-cost, all-in-one funds can simplify portfolio management by investing in multiple asset classes.
These funds, like Target Retirement Funds, come with a target date that indicates when an investor would likely retire and leave the workforce.
The year in the Fund name refers to the approximate year when an investor in the Fund would retire and leave the work force.
The Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date.
Keep in mind that investments in these funds are subject to the risks of their underlying funds, and there's no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Total Stock Market
Total Stock Market investing can be a great way to diversify your portfolio and gain exposure to the US stock market. The Vanguard Total Stock Market ETF (VTI) is a popular choice among investors.
This ETF tracks the CRSP US Total Market Index, which includes equities from large-, mid-, and small-cap categories. It's essentially a one-stop-shop for US stock market exposure.
One of the key features of the VTI is its low expense ratio, which is a mere 0.03%. This is significantly lower than many other ETFs on the market.
The VTI also offers a decent 30-day SEC yield of 1.35%, which is an average yield among US dividend-paying equities. This can be a great source of passive income for investors.
The ETF's top holdings closely resemble those of the S&P 500, with a tilt toward large-cap tech companies. However, what truly sets the VTI apart is its expansive portfolio, comprising 3,719 stock holdings.
This extensive diversification enhances the margin of safety for investors and positions the VTI as a fundamental building block in many investment portfolios.
Health Care
The health care sector is a great place to invest, especially with the Vanguard Health Care Index Fund ETF Shares (VHT) offering a cost-effective option with a moderate income yield of 1.38%.
Its expense ratio is a low 0.10%, making it a great choice for those looking to save on fees. The VHT invests primarily in the healthcare sector, with major holdings in industry giants like Eli Lilly, UnitedHealth Group, and Johnson & Johnson.
This ETF is a play on the healthcare industry's durability across market cycles and excellent prospects for long-term growth. Its focused exposure to the heavily regulated healthcare sector does introduce a higher level of risk, but it's also been able to keep up with the surge in U.S. large-cap stocks since 2020.
Shareholder-Friendly Policies and Options
Vanguard's commitment to shareholders is unwavering, with policies designed to benefit investors by minimizing fees.
Low fees mean more money in your pocket, rather than lining the coffers of money managers.
The fund family offers a diversity of fund types, with a comprehensive range of options for investors seeking diversified portfolios and long-term value creation.
Vanguard's suite of 86 exchange-traded funds provides a wide range of choices, including 10 top-performing stock funds that are perfect for Main Street investors.
These top-performing ETFs have ultra-low expense ratios, making them a great choice for those looking to save on fees.
Investment Strategies
A lazy portfolio option is a great way to invest with minimal effort, splitting your investment between stocks and bonds, or dividing it into three or four funds.
You can choose a two-fund portfolio with a 60/40 split, allocating 60% towards stocks and 40% towards bonds, using the VTSMX and VBMFX funds.
A three-fund lazy portfolio divides your investments between stocks, international stocks, and bonds, with a 60/40 rule for the stock investment.
Here's a simple three-fund lazy portfolio split: 80% in stocks and 20% in bonds, with 70% of the stock portion in US stocks and 30% in international stocks.
Investing early and often can yield incredible results, as seen in a couple's $4.3 million portfolio achieved through consistent investing.
Growth
The Vanguard Growth Index Fund ETF Shares (VUG) has been steadily beating the S&P 500 over the prior 10 years.
This fund caters to growth-oriented investors with an elevated risk tolerance, tracking the CRSP US Large Cap Growth Index, composed of 199 large-cap growth stocks.
Its expense ratio is just 0.04%, making it an attractive option for investors looking to minimize costs.
The fund's top holdings mirror those of the S&P 500, but with a heavier concentration in top names like Microsoft, Apple, and Nvidia.
Its 30-day SEC yield is only 0.47%, reflecting the fund's focus on capital appreciation over income generation.
Deciding on an Asset Mix for My Portfolio
Your investment goal, time frame for needing the money, and overall risk tolerance are key factors in determining an appropriate asset allocation.
Consider taking a Vanguard Investor Questionnaire, which can suggest an asset mix based on your results.
You can also start with a simple asset mix, like a 60/40 split between stocks and bonds, which can provide a balance between risk and potential returns.
A two-fund portfolio can be a great option, using funds like VTSMX and VBMFX to split your investment between stocks and bonds.
The target date in a Target Retirement Fund refers to the approximate year when an investor would retire and leave the workforce.
Investing in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.
Diversification is key, but it doesn't ensure a profit or protect against a loss.
You can choose a lazy portfolio option with minimal effort, such as a three-fund portfolio that divides your investments between stocks, international stocks, and bonds.
Here's a simple three-fund lazy portfolio split:
- 80% in stocks and 20% in bonds.
- Of the stock portion, 70% is in US stocks and 30% in international stocks.
This type of portfolio can be effective, but it's essential to weigh more heavily towards stocks when you're younger and towards bonds as you get closer to retirement.
Active vs Passive
Active management involves professional fund managers handpicking investments to beat market returns.
You can browse Vanguard's index mutual funds, which are a type of passively managed fund.
Passively managed funds, also called index funds, mirror certain market segments to keep pace with market returns.
Each management style has a unique method for selecting underlying investments, so it's worth comparing these aspects.
Actively managed funds are directed by professional fund managers who try to beat market returns, whereas passively managed funds aim to keep pace with market returns.
Passively managed funds are subject to ESG investment risk, which is the chance that screened investments will underperform the market.
The evaluation of companies for ESG screening or integration depends on timely and accurate reporting of ESG data by the companies.
ETFs, like Vanguard's, are subject to market volatility, so be prepared for price fluctuations when buying or selling.
VTI vs VOO
When considering VTI and VOO, it's essential to weigh your personal preferences and investment goals.
VOO is a more appealing option if you value the reputation and recognition of the S&P 500 and want to focus on large-cap stocks.
If you're open to exploring mid- and small-cap stocks and desire a more diversified portfolio, then VTI could be a compelling choice.
Both ETFs are influenced by their respective indexes' market-cap weighting, which means their performances are likely to be comparable in the long run.
In certain market conditions, there could be slight deviations in performance, with mid- and small-cap stocks potentially outperforming large-cap stocks.
Conversely, if large-cap stocks regain dominance, VOO might come out ahead, potentially by a small margin.
Expense Ratios and Performance
Vanguard's expense ratios are super low, ranging from 0.04% to 0.15% for most index funds.
Simple index funds like total stock or bond indexes have expense ratios on the lower end, while more complicated markets like precious metals have higher fees.
These low expense ratios mean you can keep more of your money invested, which is a big plus for long-term investors.
A $10,000 investment in a fund with a 0.1% expense ratio would cost you $10 per year, which is a small price to pay for the benefits of investing in a diversified portfolio.
You can avoid Vanguard's annual service fee of $20 by having at least $10,000 in your account or agreeing to electronic delivery for all documents.
Here's a rough idea of what you can expect to pay in expense ratios for different types of Vanguard index funds:
Keep in mind that these are just rough estimates, and the actual expense ratio for a specific fund may be different.
Popular Vanguard Funds
Vanguard has dozens of index fund options to choose from. If you're looking for a simple and low-fee investment solution, consider these four popular Vanguard funds.
The Vanguard Total Stock Market Index Fund (VTSMX) puts investors in the middle of the U.S. equity market, covering all ranges of investments from small to large-cap and value stocks.
Vanguard's Total Stock Market Index Fund covers the entire U.S. equity market, making it a great option for those looking to invest in the American stock market.
The Vanguard Total International Stock Index (VTIAX) gives investors exposure to international stock markets, which tend to have a low correlation with US stock performance, making it a great option for diversification.
Here are the four popular Vanguard funds mentioned earlier:
These four funds have the best combination of simplicity, low fees, and diversification across asset classes, making them a great starting point for any investment portfolio.
Getting Started
Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.
To get started, find the right account that matches your investing goals, as Vanguard offers various accounts to help you reach your objectives.
You can check out the types of accounts they offer on their website, including a brief demo on how to open an account.
Accounts and Plans
Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.
You can choose from various accounts to suit your investing goals. Whatever your goal is, Vanguard has an account to help you reach it.
Vanguard offers different types of accounts. Check out the options to find the one that's right for you.
Opening an account is a straightforward process. You can even watch a brief demo to learn how to do it.
Ready to Invest?
Ready to invest in a mutual fund? You're in good company, as 84 of 94 Vanguard funds outperformed their peer group averages for the ten-year period ended September 30, 2024.
All investing is subject to risk, including the possible loss of money you invest. Diversification doesn't ensure a profit or protect against a loss.
New to Vanguard or looking to consolidate your savings? You can rest assured that Vanguard offers a wide range of funds to choose from.
Frequently Asked Questions
What Vanguard funds have a 5 star rating?
Vanguard Wellesley Income Admiral and Vanguard Tax-Managed Balanced Fund Admiral have received a 5-star rating from investors. These highly-rated funds offer a balance of income and growth potential
What is the best performing Vanguard ETF?
As of the latest data, Vanguard's best-performing ETF is VOOG, with a year-to-date return of 38%. This ETF tracks large-cap growth stocks and is heavily weighted with popular "Magnificent Seven" stocks.
How many Vanguard mutual funds are there?
Vanguard offers more than 100 distinct mutual funds across various categories. These funds include stock, bond, international, sector/specialty, and balanced mixes.
How many index funds does Vanguard have?
Vanguard offers more than 100 index funds across various markets and sectors. Explore Vanguard's extensive range of index funds for investment options.
Which Vanguard fund is closest to the S&P 500?
The Vanguard 500 Index Fund Admiral Class (VFIAX) is the closest Vanguard fund to the S&P 500, tracking the same 500 large-cap U.S. companies. This fund offers a low-cost, diversified investment option for those seeking to mirror the S&P 500.
Sources
- https://www.advisoryhq.com/articles/list-of-all-vanguard-funds-expense-ratios-performance/
- https://investor.vanguard.com/investment-products
- https://www.iwillteachyoutoberich.com/vanguard-index-funds/
- https://www.fool.com/investing/2024/05/27/10-best-vanguard-funds-to-buy-right-now/
- https://investor.vanguard.com/investment-products/actively-managed-funds
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