When it comes to investing, one word is often the key to success: energy. As 2021 and 2022 have demonstrated, stocks and bonds may start the year strongly, but sometimes the markets can take a turn for the worse. As the markets have been volatile in recent years, many investors have looked to index funds as an alternative that offers a good balance of risk and reward.
What are index funds? index funds are mutual funds or exchange-traded funds that track a specific stock market index, such as the S&P 500 or the Dow Jones Industrial Average. By investing in an index fund, investors are exposed to hundreds of stocks, giving them a diversified portfolio. index funds have low management fees and are generally considered to be a good option for long-term investors.
In 1926, the Composite stock Index was created to measure market performance. Today, the S&P 500 is the most widely-used index to measure the performance of the stock market, and is often said to be the best option for most investors. For those looking for a fund that tracks the S&P 500, the Vanguard 500 Index Fund Admiral Shares (VFIAX) is an excellent choice. This fund has an expense ratio of 0.04%, and has had an average return of 11.7% over the past 10 years.
For investors looking to invest in bonds, the iShares Core U.S. Aggregate Bond ETF (AMEX:AGG) is a good choice. This ETF tracks the Bloomberg Barclays U.S. Aggregate Bond Index, which is a broad-based index that covers the entire U.S. bond market. This fund has an expense ratio of 0.05%, and has had an average return of 3.9% over the past 10 years.
If you’re looking for a fund that invest in dividend stocks, the Vanguard High Dividend Yield Index Fund (VHDYX) is an excellent choice. This fund tracks the FTSE High Dividend Yield Index, which includes stocks with high dividend yields. This fund has an expense ratio of 0.11%, and has had an average return of 10.8% over the past 10 years.
Two other index funds worth considering are the Kinetics Small-Cap Opportunities Fund (KSOAX) and the FNGU – MicroSectors FANG+™ Index 3X Leveraged ETN (AMEX:FNGU). The Kinetics Small-Cap Opportunities Fund is a concentrated portfolio of small- to mid-sized growth companies. This fund has had an impressive return of 34.7% in 2022 and has had an average annual return of 17.8% over the past five years. The FNGU – MicroSectors FANG+™ Index 3X Leveraged ETN has had an impressive return of over 27% in the past week and has outperformed the broader market significantly.
For those looking to invest in index funds for 2023, these five funds are all excellent choices. Whether you’re looking for a fund that invest in dividend stocks, bonds, or small-cap stocks, there’s an index fund for you.
