Thanks to their reputation for low costs and high quality, Vanguard mutual funds are widely popular. With more than $6 trillion in assets, Vanguard dominates the mutual fund and exchange-traded fund landscape in the United States. In the U.S., Vanguard offers 204 funds with an average 2022 asset-weighted expense ratio of 0.08%, a testament to its commitment to low fees. In this article, we'll take a closer look at some of the top Vanguard mutual funds to invest in for the long term.
An index fund is an investment fund – either a mutual fund or an exchange-traded fund (ETF) – that is based on a preset basket of stocks, bonds, or other assets. Index funds aim to replicate the performance of a specific market index, such as the S&P 500 or the Dow Jones Industrial Average. Vanguard is known for its index funds, which are designed to provide broad exposure to various market segments at a low cost.
One of Vanguard's most popular mutual funds is the Vanguard Total Stock Market Index Fund (VTSMX). This fund aims to replicate the performance of the CRSP US Total Market Index, which includes nearly 4,000 stocks. VTSMX has an expense ratio of just 0.14% and has consistently outperformed the S&P 500 over the long term. This fund is an excellent choice for investors looking for broad exposure to the U.S. stock market.
Another popular Vanguard mutual fund is the Vanguard Total International Stock Index Fund (VGTSX). This fund aims to replicate the performance of the FTSE Global All Cap ex US Index, which includes nearly 7,000 stocks from around the world, excluding the U.S. VGTSX has an expense ratio of just 0.17% and provides investors with exposure to international markets, which can help to diversify their portfolios and reduce risk.
For investors looking for exposure to the bond market, the Vanguard Total Bond Market Index Fund (VBMFX) is an excellent choice. This fund aims to replicate the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index, which includes more than 8,000 bonds. VBMFX has an expense ratio of just 0.15% and provides investors with exposure to the entire U.S. bond market, from Treasuries to corporate bonds.
For investors looking for a more actively managed fund, the Vanguard Dividend Growth Fund (VDIGX) is a great choice. This fund invests in high-quality companies with the potential for long-term dividend growth. VDIGX has an expense ratio of just 0.22% and has consistently outperformed its benchmark over the long term. This fund is an excellent choice for investors looking for a combination of income and growth potential.
The Vanguard Health Care Fund (VGHCX) is another actively managed fund that has been a top performer over the long term. This fund invests in companies in the health care sector, including pharmaceuticals, biotech, and medical devices. VGHCX has an expense ratio of just 0.34% and has consistently outperformed its benchmark over the long term. This fund is an excellent choice for investors looking for exposure to the health care sector.
For investors looking for exposure to the real estate market, the Vanguard Real Estate Index Fund (VGSLX) is a great choice. This fund aims to replicate the performance of the MSCI US Investable Market Real Estate 25/50 Index, which includes companies in the real estate industry, including REITs. VGSLX has an expense ratio of just 0.10% and provides investors with exposure to the real estate market, which can help to diversify their portfolios and reduce risk.
Another great Vanguard mutual fund for long-term investors is the Vanguard Target Retirement 2050 Fund (VFIFX). This fund is designed for investors who plan to retire around the year 2050 and provides a diversified portfolio of stocks and bonds that automatically adjusts as the investor gets closer to retirement. VFIFX has an expense ratio of just 0.15% and is an excellent choice for investors who want a hands-off approach to retirement planning.
In conclusion, Vanguard offers a wide variety of mutual funds for investors looking to build a diversified, long-term portfolio. Whether you're looking for exposure to the stock market, the bond market, or specific sectors, there's a Vanguard mutual fund that can help you achieve your investment goals. With their low fees and commitment to quality, Vanguard mutual funds are an excellent choice for investors of all kinds.
